Fatty liver index (FLI), a predictor of nonalcoholic fatty liver disease, has been reported to be associated with several metabolic disorders. This study aimed to evaluate the relationship between FLI and new onset of diabetes mellitus (DM). We investigated the association of FLI with new onset of DM during a 10-year period in subjects who received annual health examinations (n = 28,990). After exclusion of subjects with DM at baseline and those with missing data, a total of 12,290 subjects (male/female: 7925/4365) who received health examinations were recruited. FLI was significantly higher in males than in females. During the 10-year period, DM was developed in 533 males (6.7%) and 128 females (2.9%). Multivariable Cox proportional hazard models with a restricted cubic spline showed that the risk of new onset of DM increased with a higher FLI at baseline in both sexes after adjustment of age, fasting plasma glucose, habits of alcohol drinking and current smoking, family history of DM and diagnosis of hypertension and dyslipidemia at baseline. When the subjects were divided into subgroups according to tertiles of FLI level at baseline (T1-T3) in the absence and presence of impaired fasting glucose (IFG), hazard ratios after adjustment of the confounders gradually increased from T1 to T3 and from the absence to presence of IFG in both male and female subjects. In conclusion, a high level of FLI predicts new onset of DM in a general population of both male and female individuals.