Type 2 diabetes mellitus is likely the third modifiable risk factor for pancreatic cancer after cigarette smoking and obesity. Epidemiological investigations have found that long‐term type 2 diabetes mellitus is associated with a 1.5‐fold to 2.0‐fold increase in the risk of pancreatic cancer. A causal relationship between diabetes and pancreatic cancer is also supported by findings from prediagnostic evaluations of glucose and insulin levels in prospective studies. Insulin resistance and associated hyperglycemia, hyperinsulinemia, and inflammation have been suggested to be the underlying mechanisms contributing to development of diabetes‐associated pancreatic cancer. Signaling pathways that regulate the metabolic process also play important roles in cell proliferation and tumor growth. Use of the antidiabetic drug metformin has been associated with reduced risk of pancreatic cancer in diabetics and recognized as an antitumor agent with the potential to prevent and treat this cancer. On the other hand, new‐onset diabetes may indicate subclinical pancreatic cancer, and patients with new‐onset diabetes may constitute a population in whom pancreatic cancer can be detected early. Biomarkers that help define high‐risk individuals for clinical screening for pancreatic cancer are urgently needed. Why pancreatic cancer causes diabetes and how diabetes affects the clinical outcome of pancreatic cancer have yet to be fully determined. Improved understanding of the pathological mechanisms shared by diabetes and pancreatic cancer would be the key to the development of novel preventive and therapeutic strategies for this cancer. © 2011 Wiley Periodicals, Inc.