Background: The chromosome 7q32 region is linked to metabolic syndrome and obesity related traits in the Family Heart Study. As part of a fine mapping study of the region, we evaluated the relationship of polymorphisms to fasting glucose levels and Type 2 diabetes. Methods: Thirty-nine HapMap defined tag SNPs in a 1.08 Mb region and a novel deletion polymorphism were genotyped in 2,603 participants of the NHLBI Family Heart Study (FHS). Regression modeling, adjusting for BMI, age, sex, smoking and the TCF7L2 polymorphism, was used to evaluate the association of these polymorphisms with T2D and fasting glucoses levels. Results: The deletion polymorphism confers a protective effect for T2D,with homozygous deletion carriers having a 53% reduced risk compared to non-deleted carriers. Among non-diabetics, the deletion was significantly associated with lower fasting glucose levels in men (p = 0.038) but not women (p = 0.118). In addition, seven SNPs near the deletion were significantly associated (p < 0.01) to diabetes. Conclusion: Chromosome 7q32 contains both SNPs and a deletion that were associated to T2D. Although the deletion region contains several islands of strongly conserved sequence, it is not known to contain a transcribed gene. The closest nearby gene, EXOC4, is involved in insulin-stimulated glucose transport and may be a candidate for this association. Further work is needed to determine if the deletion represents a functional variant or may be in linkage disequilibrium with a functional mutation influencing EXOC4 or another nearby gene.