To compare the number of chronic conditions among a list of 12 and their association with physical function among postmenopausal non-Veteran and Veteran women with diabetes.Among women with diabetes from the Women's Health Initiative, we compared the average number of chronic conditions between non-Veterans and Veterans and the association between total number of chronic conditions on subsequent RAND-36 physical function. To examine associations between each condition and subsequent physical function, we compared women with diabetes plus one chronic condition to women with diabetes alone using linear regression in separate models for each condition and for non-Veterans and Veterans.Both non-Veterans (N = 23,542) and Veterans (N = 618) with diabetes had a median of 3 chronic conditions. Decreases in physical function for each additional condition were larger among Veterans than non-Veterans (-6.3 vs. -4.1 points). Decreases in physical function among women with diabetes plus one chronic condition were greater than that reported for diabetes alone for all combinations and were more pronounced among Veterans (non-Veterans: -11.1 to -24.2, Veterans: -16.6 to -40.4 points). Hip fracture, peripheral artery disease, cerebrovascular disease, and coronary disease in combination with diabetes were associated with the greatest decreases in physical function.Chronic conditions were common among postmenopausal women with diabetes and were associated with large declines in physical function, particularly among Veterans. Interventions to prevent and reduce the impact of these conditions and facilitate coordination of care among women with diabetes may help them maintain physical function.