Diabetic autonomic neuropathy is a possible link between abnormal metabolism in type 2 diabetes mellitus (T2DM) and risk for atrial fibrillation (AF) and heart failure (HF). The aim of this study was to elucidate the association between attenuated heart rate recovery (HRR) and these manifestations of myocardial dysfunction in T2DM. Nine hundred fourteen consecutive patients with T2DM (mean age 56 ± 11 years, 508 men) without diabetes mellitus complications, with negative results on stress echocardiography, were enrolled. Patients with known cardiac disease were excluded. Demographics, clinical assessment, co-morbidities, and insulin use were collected prospectively. The association of HRR with new-onset HF and AF was sought using a Cox proportional-hazards model. There were 47 events (22 HF and 25 AF) during a median follow-up period of 7.8 years. Events were associated with age, exercise capacity, HRR, and left atrial volume index but not with baseline glycosylated hemoglobin, left ventricular mass index, or standard markers of diastolic function. In sequential Cox models for the combined outcomes, the model based on clinical data (age and gender; overall chi-square = 5.5) was not significantly improved by left atrial volume index (chi-square = 8.6, p = 0.10) or maximum METs (chi-square = 8.7, p = 0.07) but was significantly improved by adding HRR (chi-square = 19.7, p = 0.004). In addition, HRR provided significant incremental prognostic value regarding the composite end point (net reclassification improvement 19.2%, p = 0.04; integrated discrimination improvement 1.58%, p = 0.004). In conclusion, the association of HRR with subsequent HF and AF, independent of and incremental to left atrial volume index and other markers of abnormal cardiac structure and function, indicates a role for autonomic neuropathy as the link between metabolic and cardiac risk in patients with T2DM.