Purpose The purpose of this study was to examine age-related differences in mood, diabetes-related distress, and functional outcomes in activities sensitive to impaired sleep in adults with type 2 diabetes mellitus (T2DM) and comorbid obstructive sleep apnea (OSA) and insomnia. This study also evaluated the associations of age, insomnia severity, and OSA severity on outcome variables. Methods This study was a secondary analysis of pooled baseline data from 2 randomized controlled trials among adults with T2DM with symptoms of sleep disorders (N = 145,109 younger adults, 36 older adults; 46.2% male; 67.6% white). Comorbid OSA and insomnia was defined as Apnea-Hypopnea Index ≥5 events per hour and Insomnia Severity Index ≥10. Outcome variables included mood, diabetes-related distress, and functional outcomes. Results Older adults reported better mood, lower diabetes-related distress, and higher functional outcomes relative to younger adults (all Ps < .05). Insomnia severity was associated with worse mood ( b = 2.59, P < .001) and diabetes-related distress ( b = 1.40, P < .001) and lower functional outcome ( b = −0.22, P < .001). Older age was associated with lower diabetes-related distress ( b = −0.44, P = .040). Conclusion Older age was a protective factor of mood disturbance, diabetes-related distress, and functional impairment in adults with T2DM and comorbid OSA and insomnia. Insomnia severity was associated with greater mood disturbance, diabetes-related distress, and functional impairment when OSA and insomnia coexist. The results suggest that diabetes care and education specialists should assess patients for impaired sleep.