Men with diabetes mellitus are less likely to be diagnosed with prostate cancer (PCa). As diabetic men have lower serum PSA, it is unclear if this is due to lower PCa incidence or reflects detection bias from fewer PSA-triggered biopsies. To account for differential biopsy rates, we used multivariate regression to examine the link between diabetes and PCa risk in the Reduction by Dutasteride of Prostate Cancer Events (REDUCE) trial, which required all subjects to undergo biopsy regardless of PSA. We further tested for interaction between diabetes and obesity. Diabetes status and body mass index (BMI) measurements were obtained at baseline. On multivariate analysis, diabetes was not associated with PCa risk (odds ratio (OR) 1.01, 95% confidence interval 0.79-1.30, P=0.92) or risk of low- or high-grade disease (all P ≥ 0.65). When stratified by obesity, diabetes was also not associated with PCa risk in any BMI category (all P ≥ 0.15). However, there was suggestion of effect modification by obesity for high-grade disease (P-interaction=0.053). Specifically, diabetes was associated with decreased risk of high-grade PCa in normal-weight men but increased risk in obese men (OR 0.35 vs 1.38). In the REDUCE trial, when all men underwent biopsy, diabetes was not associated with lower PCa risk, but rather equal risk of PCa, low-grade PCa and high-grade PCa.