Serum γ-glutamyltransferase (GGT) concentration within its normal range has emerged as an important predictor in the pathogenesis of diabetes. We studied serum GGT as a predictor of type 2 diabetes incidence and a possible interaction between obesity and GGT on the development of type 2 diabetes in men and women. A prospective cohort study of 20,158 Finnish men and women aged 25-64 yr who participated in cardiovascular risk-factor surveys carried out in four areas during 10 yr. The average follow-up time was 12.7 yr, and there were 388 incident diabetes cases. Serum GGT cut points were at the 25th, 50th, 75th, and 90th percentiles. Initiation of new diabetes medication defined incidence cases. After adjustment for known risk factors of type 2 diabetes, relative risks for incident diabetes across GGT categories were 1.0, 1.2, 2.3, 3.1, and 3.9 among men and 1.0, 0.8, 1.7, 3.5, and 6.4 among women (P for trend < 0.01, respectively). Body mass index appeared to be more strongly associated with type 2 diabetes in both men and women over age 50 yr with GGT median or greater, compared with subjects with GGT less than median. In conclusion, in women as well as men, serum GGT level within its normal range predicted type 2 diabetes and may modify the well-known association between body mass index and type 2 diabetes.