The aim of this article is to prospectively investigate the association of the liver enzyme γ-glutamyltransferase (GGT) with the development of diabetes and impaired glucose regulation (IGR) in a Chinese population. Seven hundred and sixty normoglycaemic subjects aged 40 years or older randomly selected from an urban community of Shanghai received a baseline investigation in May 2005. The participants were invited to receive a standard 75-g oral glucose tolerance test (OGTT) in November 2008. Incident diabetes and IGR were determined according to the 1999 WHO criteria. Serum GGT levels were significantly associated with incident diabetes or combined diabetes and IGR prospectively. After extensive adjustment, the diabetes risk was significantly increased with incrementing serum GGT quartiles (P value for trend = 0.0027). As compared with the lowest quartile of GGT, the highest quartile had an adjusted hazard ratio of 1.30 (95% CI 1.03-1.65) for developing combined diabetes and IGR. Furthermore, a high serum GGT level at baseline was independently associated with an increase in the index of homeostasis model assessment of insulin resistance (HOMA-IR) at follow-up. Serum GGT concentration, even within its normal range, is a risk marker for developing impaired glucose metabolism in middle-aged and elderly Chinese.