OBJECTIVE: To investigate the association between alcohol consumption and risk for development of diabetes. RESEARCH DESIGN AND METHODS: We examined 2,953 Japanese male office workers aged 35-59 years who did not have impaired fasting glucose (IFG) (a fasting plasma glucose concentration of 6.1-6.9 mmol/l), type 2 diabetes (a fasting plasma glucose concentration of > or =7.0 mmol/l or receipt of hypoglycemic medication), medication for hypertension, or a history of cardiovascular disease. Fasting plasma glucose concentrations were measured at periodic annual health examinations from May 1994 through May 2001. RESULTS: There was a U-shaped association between alcohol consumption and the incidence of IFG or type 2 diabetes during 7 years of follow-up, with the lowest incidence at alcohol intake of 23.0-45.9 g ethanol/day. After controlling for age, family history of diabetes, BMI, cigarette smoking, and physical activity, the relative risk for development of IFG or type 2 diabetes compared with alcohol consumption of 23.0-45.9 g ethanol/day was 1.51 (95% CI, 1.07-2.13), 1.31 (95% CI, 0.93-1.84), 1.18 (95% CI, 0.87-1.61), and 1.43 (95% CI, 1.01-2.02) with alcohol consumption of 0, 0.1-22.9, 46.0-68.9, and > or =69.0 g ethanol/day, respectively (P for quadratic trend = 0.016). Analyses by presence or absence of a risk factor revealed that a U-shaped association was more evident in older men, men without a family history of diabetes, and nonsmokers. CONCLUSIONS: These results indicate that moderate alcohol consumption among apparently healthy Japanese men is associated with reduced risk for development of IFG or type 2 diabetes.