Background and Objective: To investigate the difference in lung function according to diabetes status in a community-based prospective study. Methods: Individuals aged 40–69 years from two community-based cohorts were followed prospectively for 16 years. A spirometer was used to evaluate lung function at baseline, and lung function tests were carried out biennially thereafter. Multivariable linear regression analysis was performed for the cross-sectional and longitudinal analyses based on diabetes status. Results: Among the 6483 subjects, 2114 (32.6%) had prediabetes and 671 (10.4%) had diabetes. The prediabetes and diabetes groups had lower baseline % predicted values of forced expiratory volume in 1 s (FEV1) (mean, −1.853; 95% confidence interval [CI] –2.715 to −0.990 for prediabetes and mean, −4.088; 95% CI –5.424 to −2.752 for diabetes) and forced vital capacity (FVC) (mean, −2.087; 95% CI –2.837 to −1.337 for prediabetes and mean, −4.622; 95% CI –5.784 to −3.460 for diabetes) compared to the normoglycemia group after adjusting for relevant covariates. The rate of decline in FEV1% predicted (mean, −0.227; 95% CI –0.366 to −0.089) and FVC % predicted (mean, −0.232; 95% CI –0.347 to −0.117) during follow-up were faster in the diabetes group than in the normoglycemia group. The diabetes group had a lower proportion of normal ventilation (ptrend = 0.048) and higher proportions of restrictive (ptrend = 0.001) and mixed (ptrend = 0.035) ventilatory disorders at the last follow-up. Conclusion: Diabetes is associated with a lower baseline lung function and a faster rate of deterioration.