Abstract Background Insulin is highly recommended for diabetes management in persons with liver cirrhosis. However, few studies have evaluated its long-term effects in these persons. We conducted this study to compare the risks of mortality, liver-related complications, and cardiovascular events in persons with type 2 diabetes mellitus (T2DM) and compensated liver cirrhosis. Methods From January 1, 2000, to December 31, 2012, we selected 2047 insulin users and 4094 propensity score-matched nonusers from Taiwan’s National Health Insurance Research Database. Cox proportional hazard models were used to assess the risks of outcomes. Results The mean follow-up time was 5.84 years. The death rate during the follow-up period was 5.28 and 4.07 per 100 person-years for insulin users and nonusers, respectively. In insulin users, the hazard ratios and 95% confidence intervals (CIs) of all-cause mortality, hepatocellular carcinoma, decompensated cirrhosis, hepatic failure, major cardiovascular events, and hypoglycemia were 1.31 (1.18–1.45), 1.18 (1.05–1.34), 1.53 (1.35–1.72), 1.26 (1.42–1.86), 1.41 (1.23–1.62), and 3.33 (2.45–4.53), respectively. Conclusions This retrospective cohort study indicated that among persons with T2DM and compensated liver cirrhosis, insulin users were associated with higher risks of death, liver-related complications, cardiovascular events, and hypoglycemia compared with insulin nonusers.