To examine the association between physical functioning and mortality in people with type 2 diabetes, and determine if this association differs by race/ethnicity in managed care.We studied 7894 type 2 diabetic patients in Translating Research Into Action for Diabetes (TRIAD), a prospective observational study of diabetes care in managed care. Physical functioning was assessed with the Short Form Health Survey. The National Death Index was searched for deaths over 10years of follow-up (2000–2009).At baseline, mean age was 61.7years, 50% were non-Hispanic White, 22% were Black, and 16% of participants reported good physical functioning. Over 10years, 28% of participants died; 39% due to cardiovascular disease. Relative to those reporting good functioning, those reporting poor physical functioning had a 39% higher all-cause death rate after adjusting for age, sex, race/ethnicity, education, income, body mass index, smoking, and comorbidities (Hazard Ratio=1.39; 95% Confidence Interval: 1.16, 1.67). Although Blacks were less likely than Whites to report good functioning (p<0.01), the association between functioning and mortality did not differ by race/ethnicity.In this managed care population, self-reported physical functioning was a robust independent predictor of mortality and may be a useful benchmark for tailoring clinical care.