OBJECTIVE - To test the hypothesis that lower vital capacity is cross-sectionally associated with features of insulin resistance and is an independent predictor of incident type 2 diabetes. RESEARCH DESIGN AND METHODS - We conducted a prospective cohort study of vital capacity as a predictor of incident type 2 diabetes using 9-year follow-up data on 11,479 middle-aged adults without diabetes at baseline from the Atherosclerosis Risk in Communities (ARIC) Study. RESULTS - Forced vital capacity (FVC) and forced expiratory volume in 1 s were measured at baseline using standard spirometry. Incident type 2 diabetes cases were ascertained during follow-up. At baseline, low FVC (% predicted) was independently associated with indicators of the insulin resistance syndrome, including higher fasting levels of glucose, insulin, and triglycerides; lower fasting HDL cholesterol; and higher systolic blood pressure. In prospective analyses, there were graded associations between low FVC (% predicted) and incidence of type 2 diabetes in men and women. These associations persisted in multivariable analyses that adjusted for age, race, adiposity, smoking, physical activity, and ARIC center. Compared with individuals in the highest quartile of FVC (% predicted), the fully adjusted hazard ratio (95% CI) of diabetes in individuals in the lowest quartile was 1.6 (1.3-2.0) in men and 1.7 (1.3-2.1) in women. These relationships were stronger in those who have never smoked. CONCLUSIONS - Lower vital capacity is an independent predictor of incident type 2 diabetes. Pulmonary factors related to vital capacity deserve attention as possible risk factors for insulin resistance and diabetes.