BACKGROUND Cross-sectional analyses of North American population-based cohorts and one nonsignificant longitudinal analysis have suggested that obstructive sleep apnea (OSA) is a risk factor for diabetes mellitus. However, this observation has yet to be replicated outside the USA or be observed lonigitudinally. METHODS Residents of the Western Australian town of Busselton had their OSA quantified by the respiratory disturbance index (RDI) overnight in their own homes (MESAM IV device). Diabetes was defined as either a fasting blood glucose > or = 7 mmol/L or physician diagnosed diabetes. RESULTS Of 399 participants at baseline, 295 had complete data and did not have diabetes at baseline; 9 incident cases were observed within 4 years. At baseline moderate-severe OSA was associated with a univariate, but not multivariate, increased risk of diabetes (odds ratio = 4.37, 95% CL = 1.12, 17.12). Longitudinally, moderate-severe OSA was a significant univariate and independent risk factor for incident diabetes (fully adjusted OR = 13.45, 95% CL = 1.59, 114.11). CONCLUSIONS Moderate-severe sleep apnea was a significant risk factor for incident diabetes in this Australian population-based cohort. However, the confidence intervals were wide and meta-analyses or studies with greater power will be required to verify the relationship between sleep apnea and the incidence of diabetes in community-based populations.