Epidemiological evidence supports a direct and causal association between lipoprotein(a) [Lp(a)] levels and coronary risk, but the nature of the association between Lp(a) levels and risk of type 2 diabetes (T2D) is unclear. In this study, we assessed the association of Lp(a) levels with risk of incident T2D and tested whether Lp(a) levels are causally linked to T2D. We analyzed data on 18,490 participants from the European Prospective Investigation of Cancer (EPIC)-Norfolk cohort that included adults aged 40–79 years at baseline 1993–1997. During an average 10 years of follow-up, 593 participants developed incident T2D. Cox regression models were used to estimate the association between Lp(a) levels and T2D. In Mendelian randomization analyses, based on EPIC-Norfolk combined with DIAbetes Genetics Replication And Meta-analysis data involving a total of 10,088 diabetes case participants and 68,346 control participants, we used a genetic variant (rs10455872) as an instrument to test whether the association between Lp(a) levels and T2D is causal. In adjusted analyses, there was an inverse association between Lp(a) levels and T2D: hazard ratio was 0.63 (95% CI 0.49–0.81; P trend = 0.003) comparing the top versus bottom quintile of Lp(a). In EPIC-Norfolk, a 1-SD increase in logLp(a) was associated with a lower risk of T2D (odds ratio [OR] 0.88 [95% CI: 0.80–0.95]). However, in Mendelian randomization analyses, a 1-SD increase in logLp(a) due to rs10455872, which explained 26.8% of the variability in Lp(a) levels, was not associated with risk of T2D (OR 1.03 [0.96–1.10]; P = 0.41). These prospective findings demonstrate a strong inverse association of Lp(a) levels with risk of T2D. However, a genetic variant that elevated Lp(a) levels was not associated with risk of T2D, suggesting that elevated Lp(a) levels are not causally associated with a lower risk of T2D.