Objective: Type 2 diabetes (T2DM) is associated with a ∼2-fold increased risk of cardiovascular disease (CVD). This can be explained, in part, by the finding that large artery dysfunction already occurs before the onset of diabetes (‘ticking clock hypothesis’). Whether a similar phenomenon occurs for microvascular dysfunction is not known. We therefore tested the hypothesis that microvascular dysfunction (MVD) is already present in impaired glucose metabolism (IGM; prediabetes) and worsens further in T2DM by investigating the association between glucose metabolism and MVD using the retinal arteriolar dilator response to flicker light. Design and method: In a population-based cohort study with oversampling of T2DM (n = 2092), we determined flicker-light-induced retinal arteriolar %-dilatation (Dynamic Vessel Analyzer; Imedos, Germany) and glucose metabolism status (OGTT; classified as normal (NGM), IGM or T2DM). Differences were compared with multivariable regression adjusted for age, sex, waist, smoking, systolic-BP, lipid profile, retinopathy, eGFR, (micro)albuminuria, the use of lipid-modifying and/or blood-pressure-lowering medication, and prior CVD. Results: 1192 individuals had NGM (41% men, aged 58 ± 8 years (mean ± SD)), 323 IGM (54% men, aged 61 ± 7 years) and 577 T2DM (69% men, aged 63 ± 8 years). Arteriolar %-dilatation (mean ± SD) was 3.42 ± 2.84 in NGM, 3.01 ± 2.76 in IGM, and 2.34 ± 2.64 in T2DM. Adjusted analyses showed a lower %-dilatation in IGM (β = −0.20, [CI95% −0.56; 0.15]), which further decreased in T2DM (β = −0.61, [−0.97; −0.25]) vs NGM, p for trend = 0.001. In addition, higher HbA1c (β = −0.32, [−0.48; −0.16], p < 0.001) and fasting plasma glucose (FPG) (β = −0.16, [−0.24; −0.07], p < 0.001) were associated with lower arteriolar %-dilatation in fully adjusted models. Conclusions: Glucose metabolism status, HbA1c, and FPG are associated with reduced flicker-light-induced retinal arteriolar dilatation, independently of major cardiovascular risk factors. These findings support the concept that MVD precedes and thus may contribute to T2DM and T2DM-associated CVD.