Objective: Research on veterans with diabetes (VWD) suggested elevated rates of mental illness and substance use disorder but used samples studied 14 -21 years ago without comparator groups. To inform translational research and care-delivery models for diabetes, the purpose of this study was to compare VWD, nonveterans with diabetes (NVWD), and veterans without diabetes (VWOD) on physical and psychological functioning. Method: The study was a retrospective analysis of cross-sectional data from the National Survey on Drug Use and Health, a population-based household-interview survey, 2015 to 2018. Psychological disorders and high-risk substance use were identified with validated scales and standard diagnostic definitions. Results: Regardless of veteran status, diabetes was associated with impaired health: self-rated poor health 9.3% VWD (n ϭ 1,320), 9.0% NVWD (n ϭ 10,246), 3.5% VWOD (n ϭ 8,314); past-year hospitalization 20.4 -23.9% for those with diabetes, 12.9% for VWOD (p Ͻ .001); obesity 49.0 -54.8% for those with diabetes, 31.8% for VWOD. Mental illness was more prevalent in those with diabetes (17.0 -21.8%) than in VWOD (14.8%); high-risk substance use was less prevalent (9.7-9.8% vs. 14.0%, p Ͻ .001). Post hoc analysis by active-duty service era identified high rates of psychological problems, including mental illness (29.7%), among VWD with recent service. Conclusions: Diabetes is associated with similar impairments in veterans and nonveterans. Among VWD, recent service may increase psychological risk. Findings support guideline-recommended patientcentered care for VWD and NVWD. Translational research should assess expansion of Veterans Health Administration (VHA) multidisciplinary disease-and self-management models to non-VHA settings.