Aims: To determine the relative incidence and predictors of pulmonary arterial hypertension (PAH) in type 2 diabetes. Methods: Hospitalizations for/with and death from/with PAH, and all-cause mortality, were ascertained from validated databases for participants from the longitudinal, community-based Fremantle Diabetes Study Phase I (FDS1; n = 1287) and age-, sex- and zip code-matched people without diabetes (n = 5153) between entry (1993–1996) and end-2017. Incidence rates (IRs) and IR ratios (IRRs) were calculated. Cox proportional hazards and competing risk models generated cause-specific (cs) and subdistribution (sd) hazard ratios (HRs) for incident PAH. Results: In the pooled cohort (mean age 64.0 years, 49% males), 49 (3.8%) of the type 2 diabetes participants and 133 (2.6%) of those without diabetes developed PAH during 106,556 person-years of follow-up (IRs (95% CI) 262 (194–346) and 151 (127–179) /100,000 person-years, respectively; IRR 1.73 (1.22–2.42), P = 0.001). Type 2 diabetes was associated with an unadjusted csHR of 1.97 (1.42–2.74) and sdHR of 1.44 (1.04–2.00) (P ≤ 0.03); after adjustment for age, sex, and co-morbidities, these were 1.43 (0.83–2.47) and 1.36 (0.97–1.91), respectively (P ≥ 0.07). Conclusions: Type 2 diabetes is associated with an increased risk of PAH but this is no longer significant after adjustment for other explanatory variables and the competing risk of death.