OBJECTIVE To investigate the association between accelerometer-derived physical activity energy expenditure (PAEE) and incident type 2 diabetes (T2D) in a cohort of middle-aged adults and within subgroups. RESEARCH DESIGN AND METHODS Data were from 90,096 UK Biobank participants without prevalent diabetes (mean 62 years of age; 57% women) who wore a wrist accelerometer for 7 days. PAEE was derived from wrist acceleration using a population-specific method validated against doubly labeled water. Logistic regressions were used to assess associations between PAEE, its underlying intensity, and incident T2D, ascertained using hospital episode and mortality data up to November 2020. Models were progressively adjusted for demographic, lifestyle factors, and BMI. RESULTS The association between PAEE and T2D was approximately linear (n = 2,018 events). We observed 19% (95% CI 17–21) lower odds of T2D per 5 kJ · kg−1 · day−1 in PAEE without adjustment for BMI and 11% (9–13) with BMI adjustment. The association was stronger in men than women and weaker in those with obesity and higher genetic susceptibility to obesity. There was no evidence of effect modification by genetic susceptibility to T2D or insulin resistance. For a given level of PAEE, odds of T2D were lower among those engaging in more moderate-to-vigorous activity. CONCLUSIONS There was a strong linear relationship between PAEE and incident T2D. A difference in PAEE equivalent to an additional daily 20-min brisk walk was associated with 19% lower odds of T2D. The association was broadly similar across population subgroups, supporting physical activity for diabetes prevention in the whole population.