Elevated gamma-glutamyl transferase (GGT) levels are associated with higher risk of type 2 diabetes in observational studies, but the underlying causal relationship is still unclear. Here, we tested a hypothesis that GGT levels have a causal effect on type 2 diabetes risk using Mendelian randomization. Data were collected from 7640 participants in a South Korean population. In a single instrumental variable (IV) analysis using two stage least squares regression with the rs4820599 in the GGT1 gene region as an instrument, one unit of GGT levels (IU/L) was associated with 11% higher risk of type 2 diabetes (odds ratio (OR) = 1.11, 95% confidence interval (CI): 1.04 to 1.19). In a multiple IV analysis using seven genetic variants that have previously been demonstrated to be associated with GGT at a genome-wide level of significance, the corresponding estimate suggested a 2.6% increase in risk (OR = 1.026, 95% CI: 1.001 to 1.052). In a two-sample Mendelian randomization analysis using genetic associations with type 2 diabetes taken from a trans-ethnic GWAS study of 110 452 independent samples, the single IV analysis confirmed an association between the rs4820599 and type 2 diabetes risk (P-value = 0.04); however, the estimate from the multiple IV analysis was compatible with the null (OR = 1.007, 95% CI: 0.993 to 1.022) with considerable heterogeneity between the causal effects estimated using different genetic variants. Overall, there is weak genetic evidence that GGT levels may have a causal role in the development of type 2 diabetes.