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Although rates of adult-onset diabetes mellitus increase with increasing obesity, there is little evidence that weight loss in overweight individuals can reduce their risk of developing diabetes. Using data from the Framingham Study, we examined the effects of sustained and nonsustained weight loss on risk of diabetes mellitus among 618 overweight (body mass index ≥27) subjects 30–50 years of age. To separate sustained from nonsustained weight loss, we examined weight change in two consecutive 8-year periods. Subjects who had stable weight (±1 lb per year) during both periods served as the referent group for all analyses. Sustained weight loss led to a 37% lower risk of diabetes [relative risk (RR) = 0.63; 95% confidence interval = 0.34–1.2], and this effect was stronger for more obese (body mass index ≥29) subjects (RR = 0.38; 95% confidence interval = 0.18–0.81). Those who lost 8.1–15 lb had a 33% reduction in diabetes risk, whereas those losing more had a 51% reduction in risk. Regardless of the amount of weight lost, those who regained the lost weight had no reduction in diabetes risk (RR = 1.1 and 1.2 for those who lost 8.1–15 and >15 lb, respectively). We conclude that a modest amount of sustained weight loss can substantially reduce the risk of diabetes mellitus in overweight individuals.