Common variants of TCF7L2, encoding a β-cell-expressed transcription factor, are strongly associated with increased risk of type 2 diabetes (T2D). We examined this association using both prospective and case-control designs. A total of 2,676 healthy European white middle-aged men from the prospective NPHSII (158 developed T2D over 15 years surveillance) were genotyped for two intronic SNPs [rs 7903146 (IVS3C > T) and rs12255372 (IVS4G > T)] which showed strong linkage disequilibrium (D′ = 0.88, p < 0.001; R ² = 0.76, p < 0.001). The IVS5T allele frequency was 0.28 (95% CI 0.27–0.29) and 0.33 (0.28–0.39) in healthy and T2D, respectively (p = 0.04). Compared to CC men, CT and TT men had an adjusted [for age, body mass index, systolic blood pressure, triglyceride and C-reactive protein levels] hazard ratio for T2D of 1.65 (1.13–2.41) and 1.87 (0.99–3.53), respectively, p < 0.01. The population attributable fraction for diabetes risk was 17%. In 1459, European white T2D men and women (60% male), T allele frequency was 0.36 (0.34–0.38), and compared to NPHSII healthy men the OR for T2D for the CT and TT subjects was 1.43 (1.24–1.65) and 2.11 (1.69–2.63), respectively p = <0.0001. A similar effect was observed in 919 T2D Indian Asians [OR = 1.50 (1.14–1.99) and 1.64 (1.03–2.63) p = 0.003] and 385 Afro-Caribbean subjects [OR = 1.25 (0.90–1.75) and 1.32 (0.74–2.33) p = 0.17] compared to non-diabetic ethnically matched subjects from South London. Weaker associations were found for the IVS4G > T in all studies. Linkage disequilibrium between the two SNPs was high in Indian Asians (D′ = 0.94), but much weaker in Afro-Caribbeans (D′ = 0.17) and haplotype frequencies differed markedly in this group. These results extend previous observations to other ethnic groups, and strongly confirm that TCF7L2 genotype is a major risk factor for development of T2D.