Aims/hypothesis Vitamin D deficiency may increase the risk of type 2 diabetes. We therefore investigated whether serum concentrations of 25-hydroxyvitamin D [25(OH)D] would predict the development of prediabetes (impaired fasting glucose, impaired glucose tolerance or the two combined) and type 2 diabetes, either on their own or when combined with serum concentrations of IGF-1 or IGF-binding protein-1 (IGFBP-1), which may interact with 25(OH)D. Methods At baseline, participants aged 35-56 years without known type 2 diabetes were examined using OGTTs, 25 (OH)D and IGF peptide measurements, and anthropometric and lifestyle data. Participants who had prediabetes or type 2 diabetes at follow-up 8-10 years later were selected as cases; these were then age-and sex-matched to controls with normal glucose tolerance (NGT) at both baseline and follow-up, giving a total of 980 women and 1,398 men. Results Men but not women in the highest quartile of 25 (OH)D level had a decreased OR for developing type 2 diabetes after adjustment for confounders (OR 0.52, 95% CI 0.30, 0.90), an effect accounted for by individuals with prediabetes, but not with NGT, at baseline. In both sexes, progression from prediabetes to type 2 diabetes was reduced by about 25% per 10 nmol/l increase in 25(OH)D. A high IGFBP-1 value was a better predictor of a reduced risk of type 2 diabetes than high 25(OH)D for both sexes, whereas high IGF-1 concentrations predicted a decreased risk only in men. Conclusions/interpretation High serum 25(OH)D concentrations predict a reduced risk of type 2 diabetes in individuals with prediabetes, but not NGT. There were no significant interactions between 25(OH)D and IGFBP-1 or IGF-1 in terms of risk of diabetes. Our data suggest that vitamin D supplementation should be evaluated for the prevention of type 2 diabetes in prediabetic individuals.