Gestational diabetes (GDM) is defined as carbohydrate intolerance that begins or is first recognized during pregnancy. Although it is a well-known cause of pregnancy complications, its epidemiology has not been studied systematically. Our aim was to review the recent data on the epidemiology of GDM, and to describe the close relationship of GDM to prediabetic states, in addition to the risk of future deterioration in insulin resistance and development of overt Type 2 diabetes. We found that differences in screening programmes and diagnostic criteria make it difficult to compare frequencies of GDM among various populations. Nevertheless, ethnicity has been proven to be an independent risk factor for GDM, which varies in prevalence in direct proportion to the prevalence of Type 2 diabetes in a given population or ethnic group. There are several identifiable predisposing factors for GDM, and in the absence of risk factors, the incidence of GDM is low. Therefore, some authors suggest that selective screening may be cost-effective. Importantly, women with an early diagnosis of GDM, in the first half of pregnancy, represent a high-risk subgroup, with an increased incidence of obstetric complications, recurrent GDM in subsequent pregnancies, and future development of Type 2 diabetes. Other factors that place women with GDM at increased risk of Type 2 diabetes are obesity and need for insulin for glycaemic control. Furthermore, hypertensive disorders in pregnancy and afterwards may be more prevalent in women with GDM. We conclude that the epidemiological data suggest an association between several high-risk prediabetic states, GDM, and Type 2 diabetes. Insulin resistance is suggested as a pathogenic linkage. It is possible that improving insulin sensitivity with diet, exercise and drugs such as metformin may reduce the risk of diabetes in individuals at high risk, such as women with polycystic ovary syndrome, impaired glucose tolerance, and a history of GDM. Large controlled studies are needed to clarify this issue and to develop appropriate diabetic prevention strategies that address the potentially modifiable risk factors.