OBJECTIVE Moderate alcohol consumption has been associated with a reduced risk of mortality and coronary artery disease. The relationship between cardiovascular health and alcohol use in type 2 diabetes is less clear. The current study assesses the effects of alcohol use among participants in the Action in Diabetes and Vascular Disease: Preterax and Diamicron Modified-Release Controlled Evaluation (ADVANCE) trial. RESEARCH DESIGN AND METHODS The effects of alcohol use were explored using Cox regression models, adjusted for potential confounders. The study end points were cardiovascular events (cardiovascular death, myocardial infarction, and stroke), microvascular complications (new or worsening nephropathy or retinopathy), and all-cause mortality. RESULTS During a median of 5 years of follow-up, 1,031 (9%) patients died, 1,147 (10%) experienced a cardiovascular event, and 1,136 (10%) experienced a microvascular complication. Compared with patients who reported no alcohol consumption, those who reported moderate consumption had fewer cardiovascular events (adjusted hazard ratio [aHR] 0.83; 95% CI 0.72–0.95; P = 0.008), less microvascular complications (aHR 0.85; 95% CI 0.73–0.99; P = 0.03), and lower all-cause mortality (aHR 0.87; 96% CI 0.75–1.00; P = 0.05). The benefits were particularly evident in participants who drank predominantly wine (cardiovascular events aHR 0.78, 95% CI 0.63–0.95, P = 0.01; all-cause mortality aHR 0.77, 95% CI 0.62–0.95, P = 0.02). Compared with patients who reported no alcohol consumption, those who reported heavy consumption had dose-dependent higher risks of cardiovascular events and all-cause mortality. CONCLUSIONS In patients with type 2 diabetes, moderate alcohol use, particularly wine consumption, is associated with reduced risks of cardiovascular events and all-cause mortality.