Quetiapine has been associated with increased risk of type 2 diabetes when used in medium or high doses for the treatment of severe mental disorders. It is not known whether low doses, commonly used off-label for sedative-hypnotic purposes, are also associated with increased risk of type 2 diabetes. To investigate whether there is an association between prescription of low-dose quetiapine and the risk of type 2 diabetes. This cohort study examined nationwide Danish health registers for data regarding new users of quetiapine (n = 185 938) or selective serotonin reuptake inhibitors (SSRIs) (n = 1 031 920) who were aged 18 years or older between January 1, 1998, and December 31, 2018. Individuals with schizophrenia or bipolar disorder were excluded. Quetiapine-initiators were matched 1:1 with initiators of SSRIs, using a high-dimensional propensity score (hdPS). Maximum follow-up was 5 years. Association with cumulative dose was investigated, using a case-control approach nested among quetiapine users. Data analysis was performed from May to September 2020. Dispensing of quetiapine or SSRIs. Quetiapine prescriptions were limited to tablet strengths of 25 mg and 50 mg to focus on low-dose use. Incident type 2 diabetes was defined as first filling of an antidiabetic medication, first register diagnosis of type 2 diabetes or first hemoglobin A1C measurement greater than or equal to 6.4% (≥48 mmol/mol). Incidence rates (IRs), incidence rate ratios (IRRs), and number-needed-to-harm (NNH) were calculated for full and matched cohorts using as-treated and intention-to-treat approaches. Odds ratios (ORs) were calculated for the association with cumulative quetiapine dose. Altogether, 896 285 patients were included in the full cohort; 538 164 (60%) were female and the median (interquartile range) age was 47 (33-67) years. There were 57 701 low-dose quetiapine initiators and 838 584 SSRI initiators. The matched cohort consisted of 54 616 pairs. In as-treated analyses, the incidence of type 2 diabetes during treatment with low-dose quetiapine (425 cases) was 9.59 cases/1000 person-years (PY) (95% CI, 8.72-10.5/1000 PY), which was slightly higher than for SSRI users (8462 cases; IR, 8.13/1000 PY; 95% CI, 7.96-8.30/1000 PY), resulting in a significant IRR of 1.18 (95% CI, 1.07-1.30) and NNH of 684 (95% CI, 418-1873). However, the between-group difference was nonsignificant in the hdPS-matched cohort (IR, 9.49 vs IR, 9.58; IRR, 0.99; 95% CI, 0.87-1.13). The case-control analysis found no dose-response association of low-dose quetiapine with diabetes (OR for doubling of the cumulative dose: 1.02; 95% CI, 0.95-1.09; P = .54), but in sensitivity analyses higher daily doses were associated with diabetes (all tablet strengths: OR, 1.08; 95% CI, 1.03-1.13). In this cohort study, use of low-dose quetiapine was not associated with excess risk of type 2 diabetes in comparison with SSRIs.