To examine the incidence and predictors of carpal tunnel decompression (CTD) in community-based patients with type 2 diabetes, we studied 1,284 type 2 diabetic participants (mean ± SD age 64.1 ± 6.1 years, 49.1% male) in the longitudinal observational Fremantle Diabetes Study who had no history of CTD. A total of 67 participants (5.8%) had a first CTD during 12,109 years (mean 9.4 ± 3.7) of follow-up, an incidence of 5.5 per 1,000 patient-years. This was at least 4.2 times the incidence in the general population (P <0.001). In Cox proportional hazards analysis, significant independent determinants of first-ever CTD were higher BMI, taking lipid-lowering medication, and being in a stable relationship (P ≤ 0.021). The crude incidence of first CTD is increased in type 2 diabetes and is associated with obesity and sociodemographic/treatment factors that could indicate treatment-seeking behavior including CTD in symptomatic patients.