Abstract Background We examined the association between liver enzymes and development of type 2 diabetes in a general Korean population. Methods A total of 10,667 subjects (4,201 males and 6,466 females) aged 45 to 74 years participated in a baseline examination between 2004 and 2007. Among the subjects, 8,157 (3,231 males and 4,926 females) underwent follow-up examination from 2007 to 2011, for a median follow-up period of 4.2 years. Type 2 diabetes was defined as intake of anti-diabetic agents, insulin treatment, fasting glucose concentration of more than 126 mg/dl, or hemoglobin A1c of more than 6.5% at re-examination. Associations of liver enzymes with incidence of type 2 diabetes were analyzed using logistic regression models. Results During the follow-up period, 548 subjects (235 males, 313 females) developed type 2 diabetes. After adjusting for comprehensive diabetes risk factor, the risk of type 2 diabetes was significantly higher in the highest alanine aminotransferase (ALT) quartile than in the lowest quartile (odds ratio (OR): 1.95, 95% confidence interval (CI): 1.18-3.21 in males; OR: 1.49, 95% CI: 1.03-2.16 in females). Similar results were observed for gamma-glutamyltransferase (GGT) quartiles, but in the fully adjusted analysis, the OR for the highest versus lowest quartiles was significant only for females (OR: 1.58, 95% CI: 0.95-2.63 in males; OR: 1.85, 95% CI: 1.23-2.79 in females). Conclusions Our results suggest that serum ALT concentrations were independently associated with type 2 diabetes in both sexes, and that GGT was also independently associated but only in females.