Recent studies from the Asian subcontinent show an increasing prevalence of diabetes. This increase has been attributed to factors related to lifestyle changes related to modernisation. A periurban rural population resembling the rural in their occupation, but with access to certain urban facilities was chosen for this study. The aim of the study was to assess the impact of modernisation on the rising prevalence of diabetes in the native Indians. A total of 1637 adults aged 20 years and above (749 men and 888 women) were tested for diabetes and impaired glucose tolerance (IGT) by 2 h post-glucose challenge. Demographic, anthropometric, dietary and occupational details, were recorded. Dietary habits were similar in all categories of socio-economic strata. In the present study group, the age standardised prevalence of Type 2 diabetes was 5.9%, which was intermediate to that in the urban (11.6%) and rural (2.4%) populations. The prevalence data of the latter two population were available from previous surveys. Prevalence of impaired glucose tolerance (IGT) was high (6.9%) and similar in all three population samples. In the periurban population, a large percentage of subjects were doing only routine household work and had a sedentary life-style. After correcting for the age and BMI, sedentary work and occupation had a significant association with diabetes, suggesting that sedentary lifestyle may be an important determinant for the higher prevalence of diabetes in an urbanising population.