OBJECTIVE The aim of this study was to evaluate the effects of needle flexor tendon tenotomy treatment of the diabetic hammertoe deformity. RESEARCH DESIGN AND METHODS A multicenter randomized controlled trial of individuals with diabetes and ulcers or impending ulcers associated with hammertoes was performed between 1 November 2019 and 31 March 2021. Participants were stratified by the presence of ulcers or impending ulcers. Participants were randomly assigned to tenotomy and standard non-surgical treatment or to standard nonsurgical treatment alone. Primary outcomes were time to ulcer healing and progression from impending ulcer to active ulcer. RESULTS Of 224 screened participants with diabetes, 95 (59.0% men) were included. The mean follow-up was 291 ± 70 days, 28 (29.5%) had type 1 diabetes, mean diabetes (presented with 25–75% quartile) duration was 20 (13–26) years, and mean age was 67.7 ± 9.8 years. Of the included participants, 16 had ulcers, of whom 8 were randomly assigned to intervention. Of the remaining 79 with impending ulcers, 39 were randomly assigned to intervention. For participants with ulcers, healing rates favored tenotomy (100% vs. 37.5%, P = 0.026) as did time to ulcer healing (P = 0.04). For those with impending ulcers, incidence of progression to an active ulcer was lower (1 vs. 7, P = 0.028) and the number of ulcer-free days higher (P = 0.043) in the tenotomy group. No serious adverse events were recorded. CONCLUSIONS This randomized study showed that the simple procedure of needle flexor tendon tenotomy was effective and safe when treating and preventing ulcers associated with the diabetic hammertoe deformity.