Abstract Background Uncoupling protein 2 (UCP2) gene polymorphisms have been reported as genetic risk factors for obesity and type 2 diabetes mellitus (T2DM). We examined the association of commonly observed UCP2 G(−866)A (rs659366) and Ala55Val (C > T) (rs660339) single nucleotide polymorphisms (SNPs) with obesity, high fasting plasma glucose, and serum lipids in a Balinese population. Methods A total of 603 participants (278 urban and 325 rural subjects) were recruited from Bali Island, Indonesia. Fasting plasma glucose (FPG), triglyceride (TG), high density lipoprotein cholesterol (HDL-C), low density lipoprotein cholesterol (LDL-C) and total cholesterol (TC) were measured. Obesity was determined based on WHO classifications for adult Asians. Participants were genotyped for G(−866)A and Ala55Val polymorphisms of the UCP2 gene. Results Obesity prevalence was higher in urban subjects (51%) as compared to rural subjects (23%). The genotype, minor allele (MAF), and heterozygosity frequencies were similar between urban and rural subjects for both SNPs. All genotype frequencies were in Hardy-Weinberg equilibrium. A combined analysis of genotypes and environment revealed that the urban subjects carrying the A/A genotype of the G(−866)A SNP have higher BMI than the rural subjects with the same genotype. Since the two SNPs showed strong linkage disequilibrium (D’ = 0.946, r² = 0.657), a haplotype analysis was performed. We found that the AT haplotype was associated with high BMI only when the urban environment was taken into account. Conclusions We have demonstrated the importance of environmental settings in studying the influence of the common UCP2 gene polymorphisms in the development of obesity in a Balinese population.