OBJECTIVE - To examine depression and 3-year change in insulin resistance and risk of diabetes and whether associations vary by race. RESEARCH DESIGN AND METHODS - We analyzed data from 2,662 Caucasian, African-American, Hispanic, Japanese-American, and Chinese-American women without a history of diabetes from the Study of Women's Health Across the Nation. We estimated regression coefficients and odds ratios to determine whether depression (Center for Epidemiological Studies Depression Scale score ≥ 16) predicted increases in homeostasis model assessment of insulin resistance (HOMA-IR) and greater risk of incident diabetes, respectively, over 3 years. RESULTS - Mean baseline HOMA-IR was 1.31 (SD 0.86) and increased 0.05 units per year for all women (P < 0.0001). A total of 97 incident cases of diabetes occurred. Depression was associated with absolute levels of HOMA-IR (P < 0.04) but was unrelated to changes in HOMA-IR; associations did not vary by race. The association between depression and HOMA-IR was eliminated after adjustment for central adiposity (P = 0.85). Depression predicted a 1.66-fold greater risk of diabetes (P < 0.03), which became nonsignificant after adjustment for central adiposity (P = 0.12). We also observed a depression-by-race interaction (P < 0.05) in analyses limited to Caucasians and African Americans, the only groups with enough diabetes cases to reliably test this interaction. Race-stratified models showed that depression predicted 2.56-fold greater risk of diabetes in African Americans only, after risk factor adjustment (P = 0.008). CONCLUSIONS - Depression is associated with higher HOMA-IR values and incident diabetes in middle-aged women. These associations are mediated largely through central adiposity. However, African-American women with depression experience increased risk of diabetes independent of central adiposity and other risk factors.