Abstract Aims/hypothesis Excess risks of type 2 diabetes in UK South Asians (SA) and African Caribbeans (AC) compared with Europeans remain unexplained. We studied risks and determinants of type 2 diabetes in first- and second-generation (born in the UK) migrants, and in those of mixed ethnicity. Methods Data from the UK Biobank, a population-based cohort of ~500,000 participants aged 40–69 at recruitment, were used. Type 2 diabetes was assigned using self-report and HbA_1c. Ethnicity was both self-reported and genetically assigned using admixture level scores. European, mixed European/South Asian (MixESA), mixed European/African Caribbean (MixEAC), SA and AC groups were analysed, matched for age and sex to enable comparison. In the frames of this cross-sectional study, we compared type 2 diabetes in second- vs first-generation migrants, and mixed ethnicity vs non-mixed groups. Risks and explanations were analysed using logistic regression and mediation analysis, respectively. Results Type 2 diabetes prevalence was markedly elevated in SA (599/3317 = 18%) and AC (534/4180 = 13%) compared with Europeans (140/3324 = 4%). Prevalence was lower in second- vs first-generation SA (124/1115 = 11% vs 155/1115 = 14%) and AC (163/2200 = 7% vs 227/2200 = 10%). Favourable adiposity (i.e. lower waist/hip ratio or BMI) contributed to lower risk in second-generation migrants. Type 2 diabetes in mixed populations (MixESA: 52/831 = 6%, MixEAC: 70/1045 = 7%) was lower than in comparator ethnic groups (SA: 18%, AC: 13%) and higher than in Europeans (4%). Greater socioeconomic deprivation accounted for 17% and 42% of the excess type 2 diabetes risk in MixESA and MixEAC compared with Europeans, respectively. Replacing self-reported with genetically assigned ethnicity corroborated the mixed ethnicity analysis. Conclusions/interpretation Type 2 diabetes risks in second-generation SA and AC migrants are a fifth lower than in first-generation migrants. Mixed ethnicity risks were markedly lower than SA and AC groups, though remaining higher than in Europeans. Distribution of environmental risk factors, largely obesity and socioeconomic status, appears to play a key role in accounting for ethnic differences in type 2 diabetes risk. Graphical abstract