Aims/hypothesis: The study aimed to evaluate toe–brachial index (TBI) and ankle–brachial index (ABI) as determinants of incident cardiovascular disease (CVD) and all-cause mortality in people with type 2 diabetes and microalbuminuria. Methods: This was a prospective study including 200 participants. Unadjusted and adjusted (traditional risk factors and additional inclusion of N-terminal pro-brain natriuretic peptide [NT-proBNP] and coronary artery calcification) Cox regression models were performed. C statistics and relative integrated discrimination improvement (rIDI) evaluated risk prediction improvement. Results: Median follow-up was 6.1 years; 40 CVD events and 26 deaths were recorded. Lower TBI was associated with increased risk of CVD (HR per 1 SD decrease: 1.55 [95% CI 1.38, 1.68]) and all-cause mortality (1.41 [1.22, 1.60]) unadjusted and after adjustment for traditional risk factors (CVD 1.50 [1.27, 1.65] and all-cause mortality 1.37 [1.01, 1.60]). Lower ABI was a determinant of CVD (1.49 [1.32, 1.61]) and all-cause mortality (1.37 [1.09, 1.57]) unadjusted and after adjustment for traditional risk factors (CVD 1.44 [1.23, 1.59] and all-cause mortality 1.39 [1.07, 1.60]). After additional adjustment for NT-proBNP and coronary artery calcification, lower TBI remained a determinant of CVD (p = 0.023). When TBI was added to traditional risk factors, the AUC increased significantly for CVD, by 0.063 (95% CI 0.012, 0.115) from 0.743 (p = 0.016), but not for all-cause mortality; adding ABI did not improve the AUC significantly. The rIDI for TBI was 46.7% (p < 0.001) for CVD and 46.0% (p = 0.002) for all-cause mortality; for ABI, the rIDI was 51.8% (p = 0.004) for CVD and 53.6% (p = 0.031) for all-cause mortality. Conclusions/interpretation: Reduced TBI and ABI were associated with increased risk of CVD and all-cause mortality, independent of traditional risk factors in type 2 diabetes, and improved prognostic accuracy.