Medication management of type 2 diabetes mellitus (T2DM) in residential aged care facilities (RACFs) requires consideration of the residents’ goals of care and susceptibility to adverse drug events (ADEs). The aim of this article is to review best practice medication management for residents diagnosed with T2DM. Management of T2DM in RACFs is often focused on maintaining residents’ quality of life rather than intensive glycaemic management to reduce chronic complications, because the risks of intensive glycaemic management typically outweigh the potential benefits. Australian RACF guidelines recommend individualised glycated haemoglobin targets of 7–8.5% (53–69 mmol/mol). Strategies to reduce the risk of preventable ADEs may include education for residents, carers and staff; assessment of hypoglycaemic risk and renal function; medication review and regimen simplification; de-intensification of glucose-lowering medications; and appropriate end-of-life medication management. Use of a resident-centred multidisciplinary approach and resources tailored to the RACF setting will support residents to achieve best possible health outcomes and quality of life.