Heterogeneity in type 2 diabetes presentation, progression and treatment has the potential for precision medicine interventions that can enhance care and outcomes for affected individuals. We undertook a systematic review to ascertain whether strategies to subclassify type 2 diabetes are associated with improved clinical outcomes, show reproducibility and have high quality evidence. We reviewed publications that deployed 'simple subclassification' using clinical features, biomarkers, imaging or other routinely available parameters or 'complex subclassification' approaches that used machine learning and/or genomic data. We found that simple stratification approaches, for example, stratification based on age, body mass index or lipid profiles, had been widely used, but no strategy had been replicated and many lacked association with meaningful outcomes. Complex stratification using clustering of simple clinical data with and without genetic data did show reproducible subtypes of diabetes that had been associated with outcomes such as cardiovascular disease and/or mortality. Both approaches require a higher grade of evidence but support the premise that type 2 diabetes can be subclassified into meaningful groups. More studies are needed to test these subclassifications in more diverse ancestries and prove that they are amenable to interventions.