We investigated whether ethnic differences in handgrip strength, a marker of poor muscle strength and quality, is a potential cause of ethnic disparities in type 2 diabetes mellitus. We included 2086 Dutch, 2216 South Asian Surinamese, 2084 African Surinamese, 1786 Ghanaian, 2223 Turkish and 2199 Moroccan origin participants from the HELIUS study. We analyzed ethnic differences in handgrip strength, and its association with type 2 diabetes mellitus using logistic regression analyses adjusted for socio-demographic factors, body composition and lifestyle factors. Additionally, we investigated whether handgrip strength explained the ethnic differences in type 2 diabetes mellitus. We found that handgrip strength differed significantly across ethnic groups. After full adjustment, we found an inverse association with type 2 diabetes mellitus (OR 0.95; 95% CI 0.92-0.97) that did not differ substantially between ethnic groups, men and among women, and lean and overweight individuals. The association was not affected by the measure used to define type 2 diabetes mellitus, but was attenuated by exclusion of people with known diabetes. The ethnic differences in type 2 diabetes mellitus were not explained by handgrip strength (e.g. the OR for the South Asian Surinamese vs. Dutch changed from 5.03; 3.69-6.68 to 4.87; 3.57-6.65). In conclusion, we found large ethnic differences in handgrip strength and a consistent association of low handgrip strength with prevalent type 2 diabetes mellitus. This suggests that handgrip strength may be investigated as a target for intervention or a marker to identify people at risk of type 2 diabetes mellitus.