Psychological stress-related processes are thought to contribute to the development and progression of type 2 diabetes, but the biological mechanisms involved are poorly understood. Here, we tested the notion that people with type 2 diabetes experience chronic allostatic load, manifest as dynamic disturbances in reactivity to and recovery from stress across multiple (cardiovascular, neuroendocrine, inflammatory, metabolic) biological systems, coupled with heightened experience of chronic life stress. We carried out an experimental comparison of 140 men and women aged 50–75 y with type 2 diabetes and 280 nondiabetic individuals matched on age, sex, and income. We monitored blood pressure (BP) and heart rate, salivary cortisol, plasma interleukin (IL)-6, and total cholesterol in response to standardized mental stress, and assessed salivary cortisol over the day. People with type 2 diabetes showed impaired poststress recovery in systolic and diastolic BP, heart rate and cholesterol, and blunted stress reactivity in systolic BP, cortisol, cholesterol, and IL-6. Cortisol and IL-6 concentrations were elevated, and cortisol measured over the day was higher in the type 2 diabetes group. Diabetic persons reported greater depressive and hostile symptoms and greater stress experience than did healthy controls. Type 2 diabetes is characterized by disruption of stress-related processes across multiple biological systems and increased exposure to life stress. Chronic allostatic load provides a unifying perspective with implications for etiology and patient management.