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(1) Background: The aims of this study were to examine the incidence of lower extremity amputations (LEAs) among patients with type 2 diabetes mellitus (T2DM) and to compare the mortality risk of diabetic individuals who underwent LEA with age and sex-matched diabetic individuals without LEA. (2) Methods: We performed a descriptive observational study to assess the trend in the incidence of LEA and a retrospective cohort study to evaluate whether undergoing LEA is a risk factor for long-term mortality among T2DM patients. Data were obtained from the Hospital Discharge Database for the Autonomous Community of Madrid, Spain (2006–2015). (3) Results: The incidence rates of major below-knee and above-knee amputations decreased significantly from 24.9 to 17.1 and from 63.9 to 48.2 per 100000 T2DM individuals from 2006 to 2015, respectively. However, the incidence of minor LEAs increased over time. Mortality was significantly higher among T2DM patients who underwent LEA compared with those who did not undergo this procedure (HR 1.75; 95% CI 1.65–1.87). Male sex, older age, and comorbidity were independently associated with higher mortality after LEA. (4) Conclusions: Undergoing a LEA is a significant risk factor for long term mortality among T2DM patients, and those who underwent a major above-knee LEAs have the highest risk. [ABSTRACT FROM AUTHOR]