Background: Although diabetes has been associated with increased perioperative morbidity and mortality after hip and knee arthroplasty, its impact on early postoperative outcomes after shoulder replacement remains relatively unexplored. The purpose of the study was to determine the association of diabetes with in-hospital death, complications, length of stay, non-homebound disposition, and cost in patients undergoing shoulder arthroplasty. Methods: By use of the Nationwide Inpatient Sample database for the year 2011, an estimated 66,485 patients having undergone shoulder arthroplasty were identified and separated into groups with (21%) and without (79%) diabetes mellitus. Comparisons of specific outcome measures between diabetic and nondiabetic cohorts were performed by bivariate and multivariable analyses with logistic regression modeling. Results: Diabetes mellitus was independently associated with in-hospital death, a number of perioperative complications, prolonged hospital stay, and increased non-homebound disposition after shoulder arthroplasty. The presence of diabetes was not associated with increased hospital cost. Conclusion: Patients with preexisting diabetes are at higher risk for perioperative morbidity and mortality after shoulder arthroplasty. Future prospective research should explore in more detail the relationship between diabetes and shoulder arthroplasty outcomes. © 2014 Journal of Shoulder and Elbow Surgery Board of Trustees.