An association between type 2 diabetes mellitus (DM) and cancer has long been postulated, but the biological mechanism responsible for this association has not been defined. In part one of this review, we discussed the epidemiological evidence for increased risk of cancer, decreased cancer survival, and decreased rates of cancer screening in diabetic patients. Here we review the risk factors shared by cancer and DM and how DM medications play a role in altering cancer risk. Hyperinsulinemia stands out as a major factor contributing to the association between DM and cancer, and modulation of circulating insulin levels by DM medications appears to play an important role in altering cancer risk. Drugs that increase circulating insulin, including exogenous insulin, insulin analogs, and insulin secretagogues, are generally associated with an increased cancer risk. In contrast, drugs that regulate insulin signaling without increasing levels, especially metformin, appear to be associated with a decreased cancer risk. In addition to hyperinsulinemia, the effect of DM medications on other shared risk factors including hyperglycemia, obesity, and oxidative stress as well as demographic factors that may influence the use of certain DM drugs in different populations are described. Further elucidation of the mechanisms behind the association between DM, cancer, and the role of DM medications in modulating cancer risk may aid in the development of better prevention and treatment options for both DM and cancer. Additionally, incorporation of DM medication use into cancer prediction models may lead to the development of improved risk assessment tools for diabetic patients.