Aims To gain insights on the cardiovascular effects of metformin and sulphonylurea, the present study compares the rates of incident atrial fibrillation, stroke, cardiovascular mortality and all-cause mortality between metformin and sulphonylurea users in type 2 diabetes mellitus. Methods This was a retrospective population-based cohort study of type 2 diabetes mellitus patients receiving either sulphonylurea or metformin monotherapy between January 1, 2000, and December 31, 2019. The primary outcome was new-onset AF or stroke. Secondary outcomes were cardiovascular, non-cardiovascular and all-cause mortality. Propensity score matching (1:2 ratio) between sulphonylurea and metformin users was performed, based on demographics, CHA-DS-VASc score, past comorbidities and medication use. Cox regression was used to identify significant risk factors. Competing risk analysis was conducted using cause-specific and subdistribution hazard models. Sensitivity analyses using propensity score stratification, high-dimensional propensity score and inverse probability of treatment weighting were conducted. Subgroup analyses were conducted for age and gender in the matched cohort. Results A total of 36,228 sulphonylurea users and 72,456 metformin users were included in the propensity score-matched cohort. Multivariable Cox regression showed that sulphonylurea users had higher risks of incident AF (hazard ratio HR: 2.89, 95% confidence interval CI: 2.75–3.77 ; P <  0.0001 ) , stroke (HR: 3.23, 95% CI: 3.01–3.45; P <  0.0001), cardiovascular mortality (HR: 3.60, 95% CI: 2.62–4.81; P <  0.0001) and all-cause mortality (HR: 4.35, 95% CI: 3.16–4.75; P <  0.0001) compared to metformin users. Similarly, significant results were observed using cause-specific and subdistribution hazard models. Sensitivity analysis using techniques based on the propensity score also yielded similar results. Conclusions Sulphonylurea use was associated with higher risks of incident AF, stroke, cardiovascular mortality and all-cause mortality compared to metformin. Males and patients older than 65 years with sulphonylurea use were exposed to the highest risks.