Background Sodium glucose cotransporter‐2 inhibitors reduce systolic blood pressure (SBP), but whether they affect SBP variability is unknown. There also remains uncertainty regarding the prognostic value of SBP variability for different clinical outcomes. Methods and Results Using individual participant data from the CANVAS (Canagliflozin Cardiovascular Assessment Study) Program and CREDENCE (Canagliflozin and Renal Events in Diabetes with Established Nephropathy Clinical Evaluation) trial, we assessed the effect of canagliflozin on SBP variability in people with type 2 diabetes across 4 study visits over 1.5 years as measured by standard deviation, coefficient of variation, and variability independent of the mean. We used multivariable Cox regression models to estimate associations of SBP variability with cardiovascular, kidney, and mortality outcomes. In 11 551 trial participants, canagliflozin modestly lowered the standard deviation of SBP variability (−0.25 mm Hg [95% CI, –0.44 to −0.06]), but there was no effect on coefficient of variation (0.02% [95% CI, –0.12 to 0.16]) or variability independent of the mean (0.08 U [95% CI, –0.11 to 0.26]) when adjusting for correlation with mean SBP. Each 1 standard deviation increase in standard deviation of SBP variability was independently associated with higher risk of hospitalization for heart failure (hazard ratio [HR], 1.19 [95% CI, 1.02–1.38]) and all‐cause mortality (HR, 1.12 [95% CI, 1.01–1.25]), with consistent results observed for coefficient of variation and variability independent of the mean. Increases in SBP variability were not associated with kidney outcomes. Conclusions In people with type 2 diabetes at high cardiovascular risk or with chronic kidney disease, higher visit‐to‐visit SBP variability is independently associated with risks of hospitalization for heart failure and all‐cause mortality. Canagliflozin has little to no effect on SBP variability, independent of its established SBP‐lowering effect. Registration URL: https://www.clinicaltrials.gov ; Unique identifiers: NCT01032629, NCT01989754, NCT02065791.