Aims/hypothesis Studies on the link between diabetes and bladder cancer in Asians are rare. We investigated the association between diabetes and incidence of bladder cancer by using a large national insurance database. Methods A random sample of 1,000,000 individuals covered by the National Health Insurance was recruited. A total of 495,199 men and 503,748 women for all ages and 187,609 men and 189,762 women ≥40 years old and without bladder cancer at recruitment were followed from 2003 to 2005. Cox regression evaluated the adjusted relative risk for all ages and for age ≥40 years old. Results The results were similar for all ages and for age ≥40 years. In Cox models, patients with diabetes consistently showed a significantly higher relative risk ranging from 1.36 to 1.51 after adjustment for age, sex and other potential confounders. Age, male sex, nephropathy, urinary tract diseases (infection and stone) and statin use were associated with bladder cancer, but occupation, hypertension, stroke, ischaemic heart disease, peripheral arterial disease, eye disease, dyslipidaemia and medications (oral glucose-lowering agents including sulfonylurea, metformin, acarbose and thiazolidinediones, insulin, fibrates, ACE inhibitors/angiotensin receptor blockers and calcium channel blockers) were not. Chronic obstructive pulmonary disease and living in regions other than Metropolitan Taipei were associated with lower risk. Conclusions Patients with diabetes have a higher risk of bladder cancer. The association with urinary tract diseases suggests a complex scenario in the link between bladder cancer and diabetes at different disease stages.