Background Temporal changes in the dispensing of glucose-lowering drugs (GLD) and their associated costs among elderly populations is unclear. This information is especially relevant to countries in which medications are partly or fully government subsidized. Objective Our objective was to estimate the trends in prevalence, incidence and costs associated with GLD dispensed to older Australians. Methods We analysed Pharmaceutical Benefits Scheme data for 76,906 people aged >= 65 years dispensed diabetes medications over the period 2013-2016. Results Older males were dispensed more GLD than were older females, with the marginal difference increasing from 3.2% in 2013 (age-sex adjusted incidence rate ratio [aIRR] 1.032; 95% confidence interval [CI] 1.024-1.041; p <0.001) to 3.9% in 2016 (aIRR 1.039; 95% CI 1.030-1.047; p <0.001). The number of GLD dispensed per person was consistently lower in those aged >= 75 years than in those aged 65-74 years, with the gap widening over the years. More patients were initiated with sodium-glucose cotransporter-2 inhibitors, glucagon-like peptide-1 receptor agonists and dipeptidyl peptidase-4 inhibitors over the study period, at the expense of older GLD. The proportion of users and attributed costs associated with the use of metformin, sulfonylureas, alpha-glucosidase inhibitors and thiazolidinediones decreased over time. The total subsidized costs of GLD is forecast to increase to $A395 million by 2020. Conclusions The treatment landscape for diabetes in Australia is undergoing dynamic change. More patients were initiated with the newer but costlier GLD over the study period.