Abstract Background Mendelian randomization (MR) studies show iron positively associated with type 2 diabetes (T2D) but included potentially biasing hereditary haemochromatosis variants and did not assess reverse causality. Methods We assessed the relation of iron homeostasis with T2D and glycaemic traits bidirectionally, using genome-wide association studies (GWAS) of iron homeostasis biomarkers [ferritin, serum iron, total iron-binding capacity (TIBC), transferrin saturation (TSAT) (n ≤ 246 139)], T2D (DIAMANTE n = 933 970 and FinnGen n = 300 483), and glycaemic traits [fasting glucose (FG), 2-h glucose, glycated haemoglobin (HbA1c) and fasting insulin (FI) (n ≤ 209 605)]. Inverse variance weighting (IVW) was the main analysis, supplemented with sensitivity analyses and assessment of mediation by hepcidin. Results Iron homeostasis biomarkers were largely unrelated to T2D, although serum iron was potentially associated with higher T2D [odds ratio: 1.07 per standard deviation; 95% confidence interval (CI): 0.99 to 1.16; P-value: 0.078) in DIAMANTE only. Higher ferritin, serum iron, TSAT and lower TIBC likely decreased HbA1c, but were not associated with other glycaemic traits. Liability to T2D likely increased TIBC (0.03 per log odds; 95% CI: 0.01 to 0.05; P-value: 0.005), FI likely increased ferritin (0.29 per log pmol/L; 95% CI: 0.12 to 0.47; P-value: 8.72 x 10–4). FG likely increased serum iron (0.06 per mmol/L; 95% CI: 0.001 to 0.12; P-value: 0.046). Hepcidin did not mediate these associations. Conclusion It is unlikely that ferritin, TSAT and TIBC cause T2D although an association for serum iron could not be excluded. Glycaemic traits and liability to T2D may affect iron homeostasis, but mediation by hepcidin is unlikely. Corresponding mechanistic studies are warranted.