Background Cluster analyses have proposed different diabetes phenotypes using age, BMI, glycaemia, homoeostasis model estimates, and islet autoantibodies. We tested whether comprehensive phenotyping validates and further characterises these clusters at diagnosis and whether relevant diabetes-related complications differ among these clusters, during 5-years of follow-up. Methods Patients with newly diagnosed type 1 or type 2 diabetes in the German Diabetes Study underwent comprehensive phenotyping and assessment of laboratory variables. Insulin sensitivity was assessed using hyperinsulinaemic-euglycaemic clamps, hepatocellular lipid content using magnetic resonance spectroscopy, hepatic fibrosis using non-invasive scores, and peripheral and autonomic neuropathy using functional and clinical criteria. Patients were reassessed after 5 years. The German Diabetes Study is registered with ClinicalTrials.gov, number NCT01055093, and is ongoing. Findings 1105 patients were classified at baseline into five clusters, with 386 (35%) assigned to mild age-related diabetes (MARD), 323 (29%) to mild obesity-related diabetes (MOD), 247 (22%) to severe autoimmune diabetes (SAID), 121 (11%) to severe insulin-resistant diabetes (SIRD), and 28 (3%) to severe insulin-deficient diabetes (SIDD). At 5-year follow-up, 367 patients were reassessed, 128 (35%) with MARD, 106 (29%) with MOD, 88 (24%) with SAID, 35 (10%) with SIRD, and ten (3%) with SIDD. Whole-body insulin sensitivity was lowest in patients with SIRD at baseline (mean 4·3 mg/kg per min [SD 2·0]) compared with those with SAID (8·4 mg/kg per min [3·2]; p<0·0001), MARD (7·5 mg/kg per min [2·5]; p<0·0001), MOD (6·6 mg/kg per min [2·6]; p=0·0011), and SIDD (5·5 mg/kg per min [2·4]; p=0·0035). The fasting adipose-tissue insulin resistance index at baseline was highest in patients with SIRD (median 15·6 [IQR 9·3–20·9]) and MOD (11·6 [7·4–17·9]) compared with those with MARD (6·0 [3·9–10·3]; both p<0·0001) and SAID (6·0 [3·0–9·5]; both p<0·0001). In patients with newly diagnosed diabetes, hepatocellular lipid content was highest at baseline in patients assigned to the SIRD cluster (median 19% [IQR 11–22]) compared with all other clusters (7% [2–15] for MOD, p=0·00052; 5% [2–11] for MARD, p<0·0001; 2% [0–13] for SIDD, p=0·0083; and 1% [0–3] for SAID, p<0·0001), even after adjustments for baseline medication. Accordingly, hepatic fibrosis at 5-year follow-up was more prevalent in patients with SIRD (n=7 [26%]) than in patients with SAID (n=5 [7%], p=0·0011), MARD (n=12 [12%], p=0·012), MOD (n=13 [15%], p=0·050), and SIDD (n=0 [0%], p value not available). Confirmed diabetic sensorimotor polyneuropathy was more prevalent at baseline in patients with SIDD (n=9 [36%]) compared with patients with SAID (n=10 [5%], p<0·0001), MARD (n=39 [15%], p=0·00066), MOD (n=26 [11%], p<0·0001), and SIRD (n=10 [17%], p<0·0001). Interpretation Cluster analysis can characterise cohorts with different degrees of whole-body and adipose-tissue insulin resistance. Specific diabetes clusters show different prevalence of diabetes complications at early stages of non-alcoholic fatty liver disease and diabetic neuropathy. These findings could help improve targeted prevention and treatment and enable precision medicine for diabetes and its comorbidities. Funding German Diabetes Center, German Federal Ministry of Health, Ministry of Culture and Science of the state of North Rhine-Westphalia, German Federal Ministry of Education and Research, German Diabetes Association, German Center for Diabetes Research, Research Network SFB 1116 of the German Research Foundation, and Schmutzler Stiftung.