OBJECTIVE: To examine the associations between estrogen use and levels of insulin and glucose as well as the effect of estrogen use on the risk of type 2 diabetes. RESEARCH DESIGN AND METHODS: This report is based on 857 women who were both nondiabetic and postmenopausal at the baseline examination (1989-1992) and who completed a second examination (1993-1995) an average of 4 years later. The participants were divided into three groups: never, past, and current users based on their baseline estrogen use status. ANCOVA was used to compare the insulin and glucose levels among estrogen use groups. Logistic regression was used to evaluate the association between estrogen use and the incidence of type 2 diabetes. RESULTS: Postmenopausal estrogen use was associated with lower fasting glucose (0.2 mmol/l lower) but higher 2-h glucose levels (0.4 mmol/l higher) compared with never users. It was not significantly associated with the risk of type 2 diabetes compared with past and never users, based on American Diabetes Association or World Health Organization definitions of diabetes or on only a 2-h glucose level > or = 11.1 mmol/l. However, the risk of type 2 diabetes increased with increasing duration of estrogen use among current users, with an odds ratio of 1.10 per year of use (95% CI: 1.01-1.19). CONCLUSIONS: The data suggest that estrogen use in American Indian postmenopausal women may relate to deterioration of glucose tolerance. Longer duration of estrogen use among current users may relate to an increased risk of type 2 diabetes.