Aims: While some but not all trial data have suggested an elevated risk of Type 2 diabetes with statin use, limited data are available on the relation of statin treatment with glycaemia and risk of Type 2 diabetes among Veterans. We examined whether statin use was associated with a higher incidence of Type 2 diabetes and secondarily, if statin use was associated with high plasma glucose. Methods: Prospective analysis based on electronic health records of 3,390,799 US Veterans from 2000 to 2012. We used the Veteran Administration Corporate Data Warehouse to obtain information on random plasma glucose. Statin use was captured using the pharmacy database. Type 2 diabetes was defined as having at least one inpatient diagnosis or at least two outpatient diagnoses of Type 2 diabetes using International Classification of Disease version 9 codes 250.xx, or the use of hypoglycemic agents. We used multi-level derived propensity score and inverse probability weighting to address confounding by indication and Cox regression to estimate relative risk of Type 2 diabetes. Results: The mean age was 62±11.9 years; 93.3% were men and 82.7% were white. During a median followup of 3.0 years, 443,104 new cases of Type 2 diabetes occurred. Compared to no statin use, multivariable adjusted hazard ratio (95% CI) for Type 2 diabetes was 1.21 (1.19-1.24) for low statin potency, 1.22 (1.21-1.23) for medium statin potency, and 1.34 (1.32-1.36) for high statin potency (p linear trend <0.0001). In secondary analysis, statin use was not associated with higher plasma glucose. Conclusions: Our data show a positive association between statin use and incidence of Type 2 diabetes among US Veterans.