Background Diabetes Mellitus (DM) is a recognized factor affecting implant complication rates, including peri-implantitis and peri-implant bone loss, and the apico-coronal position of implants seems interfere on the conditions of peri-implant tissues. However, the influence of the vertical implant position in type 2 diabetics (T2DM) is unclear. Aim/Hypothesis This split-mouth randomized controlled trial evaluated the impact of implants of machined-collar placed at crestal level or supracrestally in T2DM rehabilitated with implant-retained overdentures on the clinical, microbiological, tomographic and immunoinflammatory peri-implant outcomes. Material and Methods Using a split-mouth design, 22 mandibular edentulous T2DM indicated for implant therapy were selected and received implants to retention of an overdenture. Two implants were randomly placed at supra crestal level (SL) or at crestal level (CL). Clinical, tomographic, microbiological and immunoenzymatic assays were performed at prosthesis installation (baseline) and at 6, 12 and 24 months after implant loading. Results Higher PPD and CAL were observed in CL implants when compared to SL implants at all time-points (P < 0.05). CL implants demonstrated higher levels of IL-6 at 6 months and increased amounts of IL-21, IL-17 and TNF-a at 24 months when compared to SL group (P < 0.05). CL implants showed increased bone loss from baseline to 6, 12 and 24 months when compared to SL (P < 0.05). Conclusion and clinical implications Implants placed supracrestally in T2DM individuals rehabilitated with overdentures achieved lower bone loss and improved clinical parameters with advantageous modulation of peri-implant immunoinflammatory mediators when compared to implants placed at crestal level.