AimsWe investigated the long-term effect of changes in hepatic steatosis on the risk of developing T2DM. MethodsWe evaluated 3510 participants from the 2001–2016 Korean Genome and Epidemiology Study. Those with significant alcohol consumption or T2DM during 2001–2004 were excluded. Steatosis was defined as non-alcoholic fatty liver disease-liver fat score (NAFLD-LFS) of over −0.64, and baseline values were assessed between 2001 and 2002. Differences in NAFLD-LFS (ΔLFS) and changes in steatosis status (no, intermittent [resolved or incident], and persistent steatosis) were assessed between 2003 and 2004. Changes in the risk of diabetes status were observed until 2016. ResultsOver 52,650 person-years of follow-up, T2DM developed in 296 participants (8.4%). The incidence of diabetes in those with no steatosis, intermittent steatosis, and persistent steatosis during follow-up increased by 5.1%, 14.1%, and 27.1% respectively. Multivariate-adjusted analysis revealed that the risk was higher in those with persistent steatosis than those with no steatosis and intermittent steatosis. Baseline NAFLD-LFS and ΔLFS was associated with increased risk of incident T2DM. ConclusionsInitial severity as well as aggravation of steatosis is an independent predictor of incident T2DM. Strategies aimed at reducing liver fat may prevent future development of diabetes among patients with NAFLD.