OBJECTIVE:The purpose of this study was to longitudinally examine the effect ofdiabeteson labor market outcomes.RESEARCH DESIGN AND METHODS:Using secondary data from the first two waves (1992 and 1994) of the Health and Retirement Study, we identified 7,055 employed respondents (51-61 years of age), 490 of whom reported havingdiabetesin wave 1. We estimated the effect ofdiabetesin wave 1 on the probability of working in wave 2 using probit regression. For those working in wave 2, we modeled the relationships between diabetic status in wave 1 and the change in hours worked andwork-loss days using ordinary least-squares regressions and modeled the presence of health-relatedworklimitations using probit regression. All models control for health status and job characteristics and are estimated separately by sex.RESULTS:Among individuals withdiabetes, the absolute probability of working was 4.4 percentage points less for women and 7.1 percentage points less for men relative to that of their counterparts withoutdiabetes. Change in weekly hours worked was not statistically significantly associated withdiabetes. Women withdiabeteshad 2 morework-loss days per year compared with women withoutdiabetes. Compared with individuals withoutdiabetes, men and women withdiabeteswere 5.4 and 6 percentage points (absolute increase), respectively, more likely to haveworklimitations.CONCLUSIONS:This article provides evidence thatdiabetesaffects patients, employers, and society not only by reducingemploymentbut also by contributing toworkloss and health-relatedworklimitations for those who remain employed.