OBJECTIVE Lower-extremity amputation (LEA) is common among persons with diabetes. The goal of this study was to identify geographic variation and the influence of location on the incidence of LEA among U.S. Medicare beneficiaries with diabetes. RESEARCH DESIGN AND METHODS We conducted a cohort study of beneficiaries of Medicare. The geographic unit of analysis was hospital referral regions (HRRs). Tests of spatial autocorrelation and geographically weighted regression were used to evaluate the incidence of LEA by HRRs as a function of geographic location in the U.S. Evaluated covariates covered sociodemographic factors, risk factors for LEA, diabetes severity, provider access, and cost of care. RESULTS Among persons with diabetes, the annual incidence per 1,000 of LEA was 5.0 in 2006, 4.6 in 2007, and 4.5 in 2008 and varied by the HRR. The incidence of LEA was highly concentrated in neighboring HRRs. High rates of LEA clustered in contiguous portions of Texas, Oklahoma, Louisiana, Arkansas, and Mississippi. Accounting for geographic location greatly improved our ability to understand the variability in LEA. Additionally, covariates associated with LEA per HRR included socioeconomic status, prevalence of African Americans, age, diabetes, and mortality rate associated with having a foot ulcer. CONCLUSIONS There is profound "region-correlated" variation in the rate of LEA among Medicare beneficiaries with diabetes. In other words, location matters and whereas the likelihood of an amputation varies dramatically across the U.S. overall, neighboring locations have unexpectedly similar amputation rates, some being uniformly high and others uniformly low.