Diabetes is an ambulatory care sensitive condition that quality of care can prevent complications development and hospitalization needs. However, diabetes patients with disability face greater challenges with receiving quality diabetes care than those without disabilities. This study examined diabetes-related avoidable hospitalizations (DRAH) focusing on the association with disability. We used nationally representative health insurance cohort data from 2002 to 2013. The study population is people who were newly diagnosed with type 2 diabetes. We measured the cumulated number of DRAH using the Prevention Quality Indicators (PQIs). The variables of interest were disability severity and type. We performed a recurrent events analysis using Cox proportional hazard regression model. Among 49,410 type 2 diabetes patients, 12,231 (24.8%) experienced DRAHs at least once during the follow-up period. Among the total population, 5924 (12.0%) diabetes patients were registered as disabled. The findings report that disability severity was significantly associated with higher risks for DRAH, where severely disabled diabetes patients showed the highest hazard ratio of 2.24 (95% CI 1.80–2.79). Among three DRAH indicators, severely disabled diabetes patients showed increased risks for long-term (AHR 2.21, 95% CI 1.89–2.60) and uncontrolled (AHR 2.28, 95% CI 1.80–2.88) DRAH. In addition, intellectual (AHR 5.52, 95% CI 3.78–8.05) and mental (AHR 3.97, 95% CI 2.29–6.89) disability showed higher risks than other types of disability. In conclusion, diabetes patients with disability are at higher risk for DRAH compared to those without disabilities, and those with intellectual and mental disabilities were more likely to experience DRAH compared to those with physical or other types of disability. These findings call for action to find the more appropriate interventions to improve targeted diabetes primary care for patients with disability. Further research is needed to better understand determinants of increasing risks of DRAH.