Background: High-quality diabetes care is evidence-based, timely, and equitable. Sodium-glucose cotransporter-2 inhibitors (SGLT2i) are the most recently approved class of glucose-lowering medications with additional cardio- and renal-protective benefits and low risk of hypoglycemia. Cardiovascular and kidney disease are among the most common chronic diabetes complications, whereas hypoglycemia is the most prevalent adverse effect of glucose-lowering therapy. We examine the sociodemographic and clinical factors associated with early SGLT2i initiation and appropriateness of use based on contemporaneous scientific evidence. Materials and Methods: Retrospective analysis of medical and pharmacy claims data from OptumLabs^® Data Warehouse for commercially insured and Medicare Advantage adult beneficiaries with diabetes types 1 and 2, who filled any glucose-lowering medication between January 1, 2013 and December 31, 2016. Demographic (age, sex, race, income), clinical (comorbidities), and insurance-related factors affecting first prescription for a SGLT2i were examined using multivariable logistic regression. Results: Among 1,054,727 adults with pharmacologically treated diabetes, 7.2% (n = 75,500) initiated a SGLT2i. Patients with prior myocardial infarction (MI) (odds ratio [OR]: 0.94, 95% confidence interval [CI]: 0.91-0.96), heart failure (HF) (OR: 0.93, 95% CI: 0.91-0.94), kidney disease (OR: 0.80, 95% CI: 0.78-0.81), and severe hypoglycemia (OR: 0.96, 95% CI: 0.94-0.98) were all less likely to start a SGLT2i; P < 0.001 for all. SGLT2i were also less likely to be started by patients ≥75 years (OR: 0.57, 95% CI: 0.55-0.59, vs. 18-44 years), Black patients (OR: 0.93, 95% CI: 0.91-0.95, vs. White), and those with Medicare Advantage insurance (OR: 0.63, 95% CI: 0.62-0.64, vs. commercial). Conclusions: Younger, healthier, non-Black patients with commercial health insurance were most likely to start taking SGLT2i. Patients with MI, HF, kidney disease, and prior hypoglycemia were less likely to use SGLT2i, despite evidence supporting their preferential use in these patients. Efforts to address this treatment-risk paradox may help improve health outcomes among patients with type 2 diabetes.