OBJECTIVE To investigate the relationship between HDL cholesterol (HDL-C) and cancer risk among type 2 diabetic patients. RESEARCH DESIGN AND METHODS We performed a retrospective cohort study of 14,169 men and 23,176 women with type 2 diabetes. Cox proportional hazards regression models were used to estimate the association of various levels of HDL cholesterol (HDL-C) with cancer risk. RESULTS During a mean follow-up period of 6.4 years, 3,711 type 2 diabetic patients had a cancer diagnosis. A significant inverse association between HDL-C and the risk of cancer was found among men and women. The multivariable-adjusted hazard ratios (HRs) of cancer at various levels of HDL-C at baseline (<30, 30-39.9, 40-49.9, 50-59.9, 60-69.9, 70-79.9, and >= 80 mg/dL) were 1.00, 0.87, 0.95, 1.01, 0.61, 0.45, and 0.37, respectively, inmen (P-trend = 0.027) and 1.00, 0.98, 0.88, 0.85, 0.84, 0.86, and 0.84, respectively, in women (P-trend = 0.025). When stratified by race, BMI, smoking status, or medication use, the inverse association was still present. With an updated mean of HDL-C used in the analysis, the inverse association of HDL-C with cancer risk did not change. The inverse association substantially attenuated after excluding patients who died of or were diagnosed with cancer during the first 2 years of follow-up. CONCLUSIONS The study suggests an inverse association of HDL-C with cancer risk among men and women with type 2 diabetes, whereas the effect of HDL-C was partially mediated by reverse causation.