OBJECTIVE We investigated the relationship between hs-CRP, a marker of low-grade inflammation, alone or in combination with C-peptide, a marker of hyperinsulinemia/insulin resistance, and risk for cardiovascular events (CVEs) and mortality in patients recently diagnosed with type 2 diabetes (T2D). RESEARCH DESIGN AND METHODS In patients with recent-onset T2D, we measured serum hs-CRP (n = 7,301) and C-peptide (n = 5,765) in the prospective Danish Centre for Strategic Research in Type 2 Diabetes cohort study. Patients with no prior CVE (n = 6,407) were followed until first myocardial infarction, stroke, coronary revascularization, or cardiovascular death, and all patients (n = 7,301) were followed for all-cause mortality. We computed adjusted hazard ratios (aHRs) by Cox regression and tested for the interaction between hs-CRP and C-peptide. RESULTS During follow-up (median 4.8 years), high (>3 mg/L) versus low (<1 mg/L) hs-CRP was associated with increased CVE risk (aHR 1.45 [95% CI 1.07–1.96]) and with even greater risk of all-cause mortality (2.47 [1.88–3.25]). Compared with patients with low hs-CRP (≤3 mg/L) and low C-peptide (<1,470 pmol/L), those with high levels of both biomarkers had the highest CVE (1.61 [1.10–2.34]) and all-cause mortality risk (2.36 [1.73–3.21]). Among patients with high C-peptide, risk of CVEs did not differ by low or high hs-CRP, whereas risk of all-cause mortality did. CONCLUSIONS The finding of high hs-CRP as a stronger prognostic biomarker of all-cause mortality than of CVEs may facilitate improved early detection and prevention of deadly diseases besides CVEs. Conversely, elevated C-peptide as a strong CVE biomarker supports the need to target hyperinsulinemia/insulin resistance in T2D CVE prevention.