AIMS/HYPOTHESIS: Tobacco smoking, a risk factor for diabetes, is an established modifier of DNA methylation. We hypothesised that tobacco smoking modifies DNA methylation of genes previously identified for diabetes. METHODS: We annotated CpG sites available on the Illumina Human Methylation 450K array to diabetes genes previously identified by genome-wide association studies (GWAS), and investigated them for an association with smoking by comparing current to never smokers. The discovery study consisted of 630 individuals (Bonferroni-corrected p = 1.4 × 10(-5)), and we sought replication in an independent sample of 674 individuals. The replicated sites were tested for association with nearby genetic variants and gene expression and fasting glucose and insulin levels. RESULTS: We annotated 3,620 CpG sites to the genes identified in the GWAS on type 2 diabetes. Comparing current smokers to never smokers, we found 12 differentially methylated CpG sites, of which five replicated: cg23161492 within ANPEP (p = 1.3 × 10(-12)); cg26963277 (p = 1.2 × 10(-9)), cg01744331 (p = 8.0 × 10(-6)) and cg16556677 (p = 1.2 × 10(-5)) within KCNQ1 and cg03450842 (p = 3.1 × 10(-8)) within ZMIZ1. The effect of smoking on DNA methylation at the replicated CpG sites attenuated after smoking cessation. Increased DNA methylation at cg23161492 was associated with decreased gene expression levels of ANPEP (p = 8.9 × 10(-5)). rs231356-T, which was associated with hypomethylation of cg26963277 (KCNQ1), was associated with a higher odds of diabetes (OR 1.06, p = 1.3 × 10(-5)). Additionally, hypomethylation of cg26963277 was associated with lower fasting insulin levels (p = 0.04). CONCLUSIONS/INTERPRETATION: Tobacco smoking is associated with differential DNA methylation of the diabetes risk genes ANPEP, KCNQ1 and ZMIZ1. Our study highlights potential biological mechanisms connecting tobacco smoking to excess risk of type 2 diabetes.