Background Studies of gender difference in type 2 diabetes have been inconclusive. We investigated gender difference in type 2 diabetes and the contribution of body iron, as assessed by serum ferritin to this difference. Methods We performed cross-sectional ( n?=?1707) and prospective ( n?=?1506) analyses in males and females aged 53-73 years in 1998-2001. Type 2 diabetes diagnosis was determined by questionnaire, blood glucose measurements and record linkage to type 2 diabetes registers. Gender difference in type 2 diabetes and serum ferritin contribution to the difference was examined in multivariable logistic and Cox regression models. Gender difference in fasting plasma glucose and insulin and homeostasis model assessment of insulin resistance was examined in linear regression analysis. Results In the cross-sectional analysis, a total of 201 type 2 diabetes cases were observed (males?=?111 [55.2%] vs. female?=?90 [44.8%], P?=?0.032), and in adjusted models, males had higher odds of type 2 diabetes (OR?=?1.61, 95% CI 1.10 to 2.34); higher fasting plasma glucose (ß?=?0.28, 95% CI 0.15 to 0.41), fasting plasma insulin (ß?=?0.73, 95% CI 0.26 to 1.19) and homeostasis model assessment of insulin resistance (ß?=?0.11, 95% CI 0.04 to 0.17). In the prospective analysis, males had increased risk of type 2 diabetes (HR?=?1.46, 95% CI 1.03 to 2.07). With serum ferritin introduction (100? µg/L, log-transformed) into the models, the type 2 diabetes prevalence (OR?=?1.35, 95% CI 0.91 to 1.99) and incidence (HR?=?1.38, 95% CI 0.96 to 1.97) were appreciably attenuated. Conclusions These data suggest a gender difference in type 2 diabetes, with a higher prevalence and increased type 2 diabetes risk in males. Body iron explains about two-fifths and one-fifth of the gender difference in type 2 diabetes prevalence and incidence, respectively.