Since the discovery of the hepatitis C virus (HCV) in 1989, attention has been paid to the association of chronic HCV infection and the development of diabetes. The risk factors for diabetes include older age, HCV genotype 3, severe liver fibrosis, family history of diabetes, and liver/kidney transplantation. Emerging evidence in animals and humans has shown that HCV infection induces hepatic steatosis and increases tumor necrosis factor-alpha level, both resulting in the development of insulin resistance and subsequent type 2 diabetes. It is suggested that the presence of diabetes and hepatic steatosis may enhance fibrosis progression, hepatocellular carcinoma, and atherosclerosis. Interferon is reportedly associated with improved glucose tolerance. However, interferon might enhance underlying autoimmunity against beta cells, leading to overt type 1 diabetes that is genetically predisposed or give rise to hyperglycemia, resulting in the development of type 2 diabetes. In light of the national epidemic of type 2 diabetes, the link between HCV and diabetes would be a major public health problem. Further clinical researches are awaited in order to effectively detect, prevent, and treat HCV-associated type 2 diabetes, which would also slow the progression of hepatitis C itself.