Current policy and research around type 2 diabetes (T2D) interventions largely invoke a behavioral model. We suggest that activation of the physiologic stress response (PSR) from chronic exposure to stressors, low socioeconomic status (SES), severe mental health problems, or aggressive behavior increases the risk of T2D. This article is a comprehensive review of the literature on the link between T2D and psychosocial factors focusing on prospective studies of the risk for developing diabetes. The review found an increased risk for T2D in people: exposed to stressful working conditions or traumatic events; with depression; with personality traits or mental health problems that put them in conflict with others; of low SES, either currently or in childhood; and in racial/ethnic minority populations, independent of current SES. This review suggests that T2D prevention research would be more effective if (a) the PSR to psychosocial factors (especially social disparities) was recognized and (b) intervention programs evaluated reduction in social disparities as part of a comprehensive approach.