Background Clinical trials have demonstrated that remission of type 2 diabetes can be achieved following sustained weight loss. However, the feasibility of achieving diabetes remission through weight management in real-world settings remains unclear. In this study, we aimed to examine the association of weight change at 1 year after diabetes diagnosis with long-term incidence and sustainability of type 2 diabetes remission in real-world settings in Hong Kong. Methods and findings This was a population-based observational cohort study. The territory-wide Risk Assessment and Management Programme for Diabetes Mellitus (RAMP-DM) provides regular comprehensive assessments of metabolic control and complication screening for people with diabetes in Hong Kong. We included 37,326 people with newly diagnosed type 2 diabetes who were enrolled in the RAMP-DM between 2000 and 2017, followed until 2019. Diabetes remission was defined as 2 consecutive HbA1c <6.5% measurements at least 6 months apart in the absence of glucose-lowering drugs (GLDs) and with no record of GLDs at least 3 months before these measurements. During a median follow-up of 7.9 years, 6.1% (2,279) of people achieved diabetes remission, with an incidence rate of 7.8 (95% CI: 7.5, 8.1) per 1,000 person-years. After adjusting for age at diabetes diagnosis, sex, assessment year, body mass index, other metabolic indices, smoking, alcohol drinking, and medication use, the hazard ratio (HR) for diabetes remission was 3.28 (95% CI: 2.75, 3.92; p < 0.001) for people with ≥10% weight loss within 1 year of diagnosis, 2.29 (95% CI: 2.03, 2.59; p < 0.001) for those with 5% to 9.9% weight loss, and 1.34 (95% CI: 1.22, 1.47; p < 0.001) for those with 0% to 4.9% weight loss compared to people with weight gain. During a median follow-up of 3.1 years, 67.2% (1,531) of people who had achieved diabetes remission returned to hyperglycaemia, with an incidence rate of 184.8 (95% CI: 175.5, 194.0) per 1,000 person-years. The adjusted HR for returning to hyperglycaemia was 0.52 (95% CI: 0.41, 0.65; p < 0.001) for people with ≥10% weight loss, 0.78 (95% CI: 0.68, 0.92; p = 0.002) for those with 5% to 9.9% weight loss, and 0.90 (95% CI: 0.80, 1.01; p = 0.073) for those with 0% to 4.9% weight loss compared to people with weight gain. Diabetes remission was associated with a 31% (HR: 0.69, 95% CI: 0.52, 0.93; p = 0.014) decreased risk of all-cause mortality. The main limitation of the study is that the reliability of HbA1c used to define diabetes remission can be affected by other medical conditions. Furthermore, we did not have data on bariatric surgery. Conclusions In this study, greater weight loss within the first year of diabetes diagnosis was associated with an increased likelihood of achieving diabetes remission and a decreased risk of returning to hyperglycaemia among those who had achieved diabetes remission. However, both the incidence of diabetes remission and the probability of its long-term sustainability were low with conventional management in real-world settings, in an era when the importance of weight loss was not fully appreciated. Our study provides evidence for policymakers to design and implement early weight management interventions and diabetes remission initiatives.