Type 2 diabetes mellitus (T2D) is highly prevalent in Middle-Eastern and North African Arab populations, but the molecular basis for this susceptibility is unknown. Altered DNA methylation levels were reported in insulin-secreting and responding tissues, but whether methylation in accessible tissues such as peripheral blood is associated with T2D risk remains an open question. Age-related alteration of DNA methylation level was reported in certain methylation sites, but no association with T2D has been shown. Here we report on a population-based study of 929 men and women representing the East Jerusalem Palestinian (EJP) Arab population and compare with the findings among Israeli Ashkenazi Jews. This is the first reported epigenetic study of an Arab population with a characteristic high prevalence of T2D. Results: We found that DNA methylation of a prespecified regulatory site in peripheral blood leukocytes (PBLs) is associated with impaired glucose metabolism and T2D independent of sex, body mass index, and white blood cell composition. This CpG site (Chr16: 53,809,231-2; hg19) is located in a region within an intron of the FTO gene, suspected to serve as a tissue-specific enhancer. The association between PBL hypomethylation and T2D varied by age, revealing differential patterns of methylation aging in healthy and diabetic individuals and between ethnic groups: T2D patients displayed prematurely low methylation levels, and this hypomethylation was greater and occurred earlier in life among Palestinian Arabs than Ashkenazi Jews. Conclusions: Our study suggests that premature DNA methylation aging is associated with increased risk of T2D. These findings should stimulate the search for more such sites and may pave the way to improved T2D risk prediction within and between human populations.