This study aims to describe the prevalence of depression and anxiety among a population sample of people at high risk for type 2 diabetes in Kerala, India, and examine the relationship between depressive symptoms, anxiety, and incident Type 2 Diabetes Mellitus (T2DM) over a two-year period. We used data from the Kerala Diabetes Prevention Program, a cluster-randomized controlled trial for diabetes prevention among 1007 high-risk individuals. The prevalence of depression and anxiety were estimated using the 9-item Patient Health Questionnaire and the Generalized Anxiety Disorder 7-item scale, respectively. We calculated proportions for depression and anxiety and performed generalized estimating equations (GEE) to examine the relationship between baseline mental health status and incident T2DM. The prevalence of depression and anxiety at baseline were 7.5% and 5.5%, respectively. Compared with those reporting none/low symptoms, the odds ratio for incident diabetes was 1.07 (95% CI 0.54-2.12) for participants with moderate to severe depression and 0.73 (95% CI 0.23-2.28) for participants with moderate to severe anxiety, after adjusting for potential confounders. Our findings suggest that the prevalence of depression and anxiety were higher than those previously reported in the general population in India. However, among this sample of community-based adults at high risk of developing T2DM, the presence of moderate to severe depression and/or anxiety symptoms was not significantly associated with the risk of developing T2DM. Trial registration: Australia and New Zealand Clinical Trials Registry ACTRN12611000262909. Registered 10 March 2011.