© 2015, The Author(s). Aims/hypothesis: We examined the association of prevalent and incident cardiovascular disease (CVD) with chronic liver disease in a cohort of community-based people with type 2 diabetes, in order to clarify the relationship between these two important conditions. Methods: 1,066 participants with type 2 diabetes aged 60–75 years underwent assessment of a range of liver injury markers (non-specific injury, steatosis, steatohepatitis, fibrosis, portal hypertension). Individuals were followed up for incident cardiovascular events. Results: At baseline there were 370/1,033 patients with prevalent CVD, including 317/1,033 with coronary artery disease (CAD). After a mean follow-up of 4.4years there were 44/663 incident CVD events, including 27/663 CAD events. There were 30/82 CVD-related deaths. Risk of dying from or developing CVD was no higher in participants with steatosis than in those without (HR 0.90; 95% CI 0.40, 2.00; p > 0.05). The only notable relationship was with γ-glutamyltransferase (GGT) (incident CVD: adjusted HR for doubling GGT 1.24 [95% CI 0.97, 1.59] p = 0.086; incident CAD: adjusted HR 1.33 [95% CI 1.00, 1.78] p = 0.053), suggesting that in our study population, chronic liver disease may have little effect on the development of, or mortality from, CVD. Conclusions/interpretation: An independent association between GGT and CVD warrants further exploration as a potentially useful addition to current cardiovascular risk prediction models in diabetes. However, overall findings failed to suggest that there is a clinical or pathophysiological association between chronic liver disease and CVD in elderly people with type 2 diabetes.