OBJECTIVE: Diabetes imposes a heavy burden on both health and productivity. In this study, we sought to estimate the potential productivity gains associated with the prevention of type 2 diabetes over the next 10 years in Australia. RESEARCH DESIGN AND METHODS: Dynamic life table models were constructed to estimate years of life lived and productivity-adjusted life-years (PALYs) lived by Australians aged 20-69 years over the period from 2020 to 2029. The models distinguished people with and without type 2 diabetes. PALYs were ascribed a financial value equivalent to gross domestic product (GDP) per full-time worker in Australia (∼200,000 Australian dollars [AUD]). The model simulation was first undertaken assuming currently expected trends in the incidence of type 2 diabetes and then repeated assuming hypothetically that the incidence was reduced. The difference between the modeled outputs reflected the impact of new cases of type 2 diabetes on productivity as well as the potential benefits of prevention. An annual 5% discount rate was applied to all outcomes. RESULTS: Over the next decade, 140 million years of life and 87 million PALYs will be lived by Australians of working age, contributing AUD 18.0 trillion to the country's GDP. A 10% reduction in the incidence of type 2 diabetes would result in a gain of 2,510 PALYs and AUD 532 million in GDP. CONCLUSIONS: This study illustrates the health and economic impact of type 2 diabetes and the gains that could be potentially achieved from the implementation of effective prevention strategies. However, cost-effectiveness evaluations of these prevention strategies are needed.