Background: Dementia and diabetes mellitus are common long-term conditions and co-exist in a large number of older people. People living with dementia (PLWD) may be less able to manage their diabetes, putting them at increased risk of complications such as hypoglycaemia. The aim of this review was to identify key mechanisms within different interventions that are likely to improve diabetes outcomes in PLWD. Methods: This is a realist review involving scoping of the literature and stakeholder interviews to develop theoretical explanations of how interventions might work, systematic searches of the evidence to test and develop the theories and their validation with a purposive sample of stakeholders. Twenty-six stakeholders - user/patient representatives, dementia care providers, clinicians specialising in diabetes or dementia and researchers - took part in interviews, and 24 participated in a consensus conference. Results: We included 89 papers. Ten focused on PLWD and diabetes, and the remainder related to people with either dementia, diabetes or other long-term conditions. We identified six context-mechanism-outcome configurations which provide an explanatory account of how interventions might work to improve the management of diabetes in PLWD. This includes embedding positive attitudes towards PLWD, person-centred approaches to care planning, developing skills to provide tailored and flexible care, regular contact, family engagement and usability of assistive devices. An overarching contingency emerged concerning the synergy between an intervention strategy, the dementia trajectory and social and environmental factors, especially family involvement. Conclusions: Evidence highlighted the need for personalised care, continuity and family-centred approaches, although there was limited evidence that this happens routinely. This review suggests there is a need for a flexible service model that prioritises quality of life, independence and patient and carer priorities. Future research on the management of diabetes in older people with complex health needs, including those with dementia, needs to look at how organisational structures and workforce development can be better aligned to their needs. Trial registration: PROSPERO, CRD42015020625. Registered on 18 May 2015.