Background A pervasive and persistent finding is the health disadvantage experienced by those in food insecure households. While clear associations have been identified between food insecurity and diabetes risk factors, less is known about the relationship between food insecurity and incident type 2 diabetes. The objective of this study is to investigate the association between household food insecurity and the future development of type 2 diabetes. Methods We used data from Ontario adult respondents to the 2004 Canadian Community Health Survey, linked to health administrative data (n = 4,739). Food insecurity was assessed with the Household Food Security Survey Module and incident type 2 diabetes cases were identified by the Ontario Diabetes Database. Multivariable adjusted Cox proportional hazards models were used to estimate hazard ratios (HRs) and 95% confidence intervals (CIs) for type 2 diabetes as a function of food insecurity. Results Canadians in food insecure households had more than 2 times the risk of developing type 2 diabetes compared to those in food secure households [HR = 2.40, 95% CI = 1.17–4.94]. Additional adjustment for BMI attenuated the association between food insecurity and type 2 diabetes [HR = 2.08, 95% CI = 0.99, 4.36]. Conclusions Our findings indicate that food insecurity is independently associated with increased diabetes risk, even after adjustment for a broad set of measured confounders. Examining diabetes risk from a broader perspective, including a comprehensive understanding of socioeconomic and biological pathways is paramount for informing policies and interventions aimed at mitigating the future burden of type 2 diabetes.