Recently, the transcription factor 7-like 2 (TCF7L2) gene has been associated with type 2 diabetes in subjects of European origin in the DeCode study. We genotyped the two most associated variants (rs7903146 and rs12255372) in 2,367 French type 2 diabetic subjects and in 2,499 control subjects. Both the T-allele of rs7903146 and the T-allele of rs12255372 significantly increase type 2 diabetes risk with an allelic odds ratio (OR) of 1.69 (95% CI 1.55–1.83) (P = 6.0 × 10⁻³⁵) and 1.60 (1.47–1.74) (P = 7.6 × 10⁻²⁸), respectively. In nonobese type 2 diabetic subjects (BMI <30 kg/m², n = 1,346), the ORs increased to 1.89 (1.72–2.09) (P = 2.1 × 10⁻³⁸) and 1.79 (1.62–1.97) (P = 5.7 × 10⁻³¹), respectively. The rs7903146 T at-risk allele associates with decreased BMI and earlier age at diagnosis in the type 2 diabetic subjects (P = 8.0 × 10⁻³ and P = 3.8 × 10⁻⁴, respectively), which is supported by quantitative family-based association tests. TCF7L2 is expressed in most human tissues, including mature pancreatic β-cells, with the exception of the skeletal muscle. In the subcutaneous and omental fat from obese type 2 diabetic subjects, TCF7L2 expression significantly decreased compared with obese normoglycemic individuals. During rat fetal β-cell differentiation, TCF7L2 expression pattern mimics the key marker NGN3 (neurogenin 3), suggesting a role in islet development. These data provide evidence that TCF7L2 is a major determinant of type 2 diabetes risk in European populations and suggests that this transcription factor plays a key role in glucose homeostasis.