OBJECTIVE To investigate the association between serum gamma-glutamyltransferase (GGT) and risk for development of diabetes. METHODS Longitudinal study (followed from 1994 to 2001). METHODS A work site in Japan. METHODS A total of 2918 Japanese male office workers aged 35-59 years who did not have impaired fasting glucose (IFG) (a fasting plasma glucose concentration of 6.1-6.9 mmol L-1), type 2 diabetes (a fasting plasma glucose concentration of >/=7.0 mmol L-1 or receipt of hypoglycaemic medication), medication for hypertension or hepatitis, alanine aminotransferase concentrations higher than three times the upper limit of the reference range or a history of cardiovascular disease at study entry. METHODS Incidence of IFG or type 2 diabetes over a 7-year period. RESULTS With adjustment for potential risk factors for diabetes, the relative risk for IFG compared with serum GGT <16 U L-1 was 1.23 (95% CI, 0.79-1.90), 1.50 (CI, 0.97-2.32) and 1.70 (CI, 1.07-2.71) with serum GGT of 16-24, 25-43 and >/=44 U L-1, respectively (P for trend = 0.014). The respective relative risks for type 2 diabetes compared with serum GGT <16 U L-1 were 2.54 (CI, 1.29-5.01), 2.64 (CI, 1.33-5.23) and 3.44 (CI, 1.69-6.70) (P for trend = 0.002). From stratified analyses by body mass index (BMI) and alcohol intake, a stronger linear association between serum GGT and development of IFG or type 2 diabetes was found in men with a BMI >/=23.2 kg m-2 in both those who drank <46 and >/=46 g day-1 of ethanol. CONCLUSIONS The risk for development of IFG or type 2 diabetes increased in a dose-dependent manner as serum GGT increased in middle-aged Japanese men. The increased relative risk for IFG or type 2 diabetes associated with serum GGT was more pronounced in obese men.