Using a time-dependent approach, we investigated all-site and site-specific cancer incidence in a large population stratified by diabetes status. The study analyzed a closed cohort comprised of Israelis aged 21–89 years, enrolled in a health fund, and followed from 2002 to 2012. Adjusting for age, ethnicity, and socioeconomic status, we calculated hazard ratios for cancer incidence using Cox regression separately for participants with prevalent and incident diabetes; the latter was further divided by time since diabetes diagnosis. Of the 2,186,196 individuals included in the analysis, 159,104 were classified as having prevalent diabetes, 408,243 as having incident diabetes, and 1,618,849 as free of diabetes. In both men and women, diabetes posed an increased risk of cancers of the liver, pancreas, gallbladder, endometrium, stomach, kidney, brain (benign), brain (malignant), colon/rectum, lung (all, adenocarcinoma, and squamous cell carcinoma), ovary, and bladder, as well as leukemia, multiple myeloma, non-Hodgkin lymphoma, and breast cancer in postmenopausal women. No excess risk was observed for breast cancer in premenopausal women or for thyroid cancer. Diabetes was associated with a reduced risk of prostate cancer. Hazard ratios for all-site and site-specific cancers were particularly elevated during the first year following diabetes diagnosis. The findings of this large study with a time-dependent approach are consistent with those of previous studies that have observed associations between diabetes and cancer incidence.