The association between cigarette smoking and heart disease is well established whereas its association with type 2 diabetes is less clear. This study examines the relationship between smoking and the incidence of five-year type 2 diabetes. Data were taken from the Insulin Resistance Atherosclerosis Study that considered the relationship between insulin sensitivity and cardiovascular risk factors. The sample of 906 participants provided an opportunity to examine the relationship between smoking and diabetes in a cohort with equal representation according to sex, and three ethnic groups, while using standardized measures of glucose tolerance, blood pressure, and weight and height measures. Smokers were grouped according to three mutually exclusive categories—never, former and current. Participants also were queried about the number of cigarettes smoked on a daily basis and number of years spent smoking. Current smokers displayed a significantly higher incidence of diabetes at five years than never smokers after adjustment for several factors including demographic, behavioral, anthropomorphic, and metabolic syndrome. All levels of cigarette smoking showed an increased risk of development of diabetes. Former smokers did not have a significantly increased risk compared with smokers which suggests that the risk factor is modifiable.