OBJECTIVES:  To examine the impact of oral antidiabetic medication (OAD) adherence on clinical measures, macrovascular events, and microvascular complications among veterans with incident diabetes mellitus (DM) in the first year of OAD therapy. METHODS:  The VA Corporate Data Warehouse was used to identify the first diagnosis for uncomplicated DM during 2002-2014. OAD use was assessed by proportion of days covered (PDC) for the first year of therapy using outpatient VA pharmacy records, and those with a PDC>80% were deemed adherent. Changes in clinical measures, outpatient visits and impatient admissions, and the odds of cardiovascular outcomes, cerebrovascular events, revascularization, and microvascular complications were assessed during the first year of therapy with a focus on differences due to OAD adherence while controlling for baseline demographic and clinical characteristics. RESULTS:  A total of 159,032 veterans were included and 99,430 (62.5%) were deemed initially adherent to OADs. Adherent patients had significantly larger unadjusted decreases in hemoglobin A1C, systolic blood pressure, and estimated glomerular filtration rates (all p<0.0001) over the first year. When adjusted for baseline characteristics, those nonadherent to OADs had significantly fewer outpatient visits (IRR: 0.84; 95%CI: 0.8310.849) but a higher number of inpatient admissions (IRR: 1.29; 95%CI: 1.230-1.343). Few macrovascular events were observed but nonadherent patients had a higher adjusted odds of having a stroke or transient ischemic attack (OR: 1.4; 95%CI: 1.10-1.74). Those nonadherent to OADs were also more likely to be diagnosed with nephropathy (OR: 1.1; 95%CI: 1.05-1.19) or experience a hypoglycemic event (OR: 1.7; 95%CI: 1.27-2.25) but less likely to have been diagnosed with neuropathy (OR: 0.65; 95%CI: 0.62-0.688) or retinopathy (OR: 0.78; 95%CI: 0.731-0.837) within the first year of OAD use after adjusting for baseline characteristics. CONCLUSIONS: Adherence to OADs has important consequences among patients starting DM therapy and suboptimal use can lead to complications, even in the first year of treatment.