To examine the role of area-level socioeconomic status (SES) on the development of abnormal glucose metabolism (AGM) using national, population-based data.The Australian Diabetes, Obesity and Lifestyle (AusDiab) study is a national, population-based, longitudinal study of adults aged ≥25 years. A sample of 4,572 people provided complete baseline (1999 to 2000) and 5-year follow-up (2004 to 2005) data relevant for these analyses. Incident AGM was assessed using fasting plasma glucose and 2-h plasma glucose from oral glucose tolerance tests, and demographic, socioeconomic, and behavioral data were collected by interview and questionnaire. Area SES was defined using the Index of Relative Socioeconomic Disadvantage. Generalized linear mixed models were used to examine the relationship between area SES and incident AGM, with adjustment for covariates and correction for cluster design effects.Area SES predicted the development of AGM, after adjustment for age, sex, and individual SES. People living in areas with the most disadvantage were significantly more likely to develop AGM, compared with those living in the least deprived areas (odds ratio 1.53; 95% CI 1.07-2.18). Health behaviors (in particular, physical activity) and central adiposity appeared to partially mediate this relationship.Our findings suggest that characteristics of the physical, social, and economic aspects of local areas influence diabetes risk. Future research should focus on identifying the aspects of local environment that are associated with diabetes risk and how they might be modified.