We evaluated the risk of developing diabetes in Chinese individuals with normal weight obesity (NWO). This 9-year population-based cohort study was based on the China National Diabetes and Metabolic Disorders Survey. A total of 1128 subjects without diabetes were included. Body fat percentage (BF%) was assessed by electrical bioimpedance. NWO was defined as subjects with a normal BMI (< 24 kg/m2) and an excess BF% (≥ 24% in men; ≥ 33% in women). Of 1128 individuals, 528 individuals were normal weight non-obese (NWNO), 118 (10.5%) were normal weight obese (NWO), 63 were overweight non-obese (OWNO), and 419 were overweight obese (OWO). During a follow-up of 9.0 years (interquartile range: 8.9–9.3), 113 (10.0%) individuals developed diabetes. The incidence rates of diabetes in NWNO, NWO, OWNO and OWO people were 5.69 (27 cases), 11.30 (12 cases), 3.53 (2 cases) and 19.09 (72 cases) per 1000 person-years, respectively. Cox regression analyses indicated multivariate-adjusted hazard ratios of diabetes in NWO, OWNO and OWO people were 2.110 (95% CI 1.026–4.337, p = 0.025), 0.441 (95% CI 0.101–1.928, p = 0.232) and 3.465 (95% CI 2.163–5.551, p < 0.001), respectively, relative to NWNO people. Chinese people with NWO are at increased risk of developing diabetes. We strongly suggest the incorporation of BF% measurement into the regular physical examination in Chinese medical practice.