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A recent study identified a low-frequency variant at CCND2 associated with lower risk of type 2 diabetes, enhanced insulin response to a glucose challenge, higher height, and, paradoxically, higher BMI. We aimed to replicate the strength and effect size of these associations in independent samples and to assess the underlying mechanism. We genotyped the variant in 29,956 individuals and tested its association with type 2 diabetes and related traits. The low-frequency allele was associated with a lower risk of type 2 diabetes (OR 0.53; P = 2 × 10(-13); 6,647 case vs. 12,645 control subjects), higher disposition index (β = 0.07 log10; P = 2 × 10(-11); n = 13,028), and higher Matsuda index of insulin sensitivity (β = 0.02 log10; P = 5 × 10(-3); n = 13,118) but not fasting proinsulin (β = 0.01 log10; P = 0.5; n = 6,985). The low frequency allele was associated with higher adult height (β = 1.38 cm; P = 6 × 10(-9); n = 13,927), but the association of the variant with BMI (β = 0.36 kg/m(2); P = 0.02; n = 24,807), estimated in four population-based samples, was less than in the original publication where the effect estimate was biased by analyzing case subjects with type 2 diabetes and control subjects without diabetes separately. Our study establishes that a low-frequency allele in CCND2 halves the risk of type 2 diabetes primarily through enhanced insulin secretion.