Insulin-degrading enzyme (IDE) is the ubiquitously expressed major enzyme responsible for insulin degradation. Insulin-degrading enzyme gene is located on chromosome region 10q23-q25 and exhibits a well-replicated peak of linkage with type 2 diabetes (T2DM). Several genetic association studies examined IDE gene as a susceptibility gene for T2DM with controversial results. However, pathophysiological mechanisms involved have remained elusive. We verified associations of two IDE polymorphisms (rs1887922 and rs2149632) with T2DM risk in two independent German cohorts and evaluated in detail the association of common variants with insulin metabolism and glycemic traits. We confirmed previously published findings for diabetes-associated rs1887922 and rs2149632 in the European Prospective Investigation into Cancer and Nutrition-Potsdam cohort (n = 3049; RR 1.26, p = 0.003 and RR 1.33, p < 0.0001 for additive model). Haplotypes which carried one risk allele of rs2149632 or two risk alleles of both studied IDE SNPs also demonstrated a strong association with increased T2DM risk in this cohort (p = 0.001 and p < 0.0001, respectively). However, we found no significant T2DM association in the cross-sectional metabolic syndrome Berlin-Potsdam cohort (n = 1026). In nondiabetic subjects (NGT+IFG/IGT; n = 739), we found an association of rs2149632 with impaired glucose-derived insulin secretion and a trend to decreased insulin sensitivity for rs1887922. In the NGT subjects (n = 440), the association with decreased insulin secretion for rs2149632 remain significant, and the association with decreased hepatic insulin degradation for rs1887922 were observed additionally. This study validates and confirms the association of IDE polymorphisms with T2DM risk in the prospective German cohort and provides novel evidence of influences of IDE genetic variants on insulin metabolism.