Type 2 diabetes is a major public health concern. Several studies have found an increased diabetes risk associated with long-term air pollution exposure. However, most current studies are limited in their generalizability, exposure assessment, or the ability to differentiate incidence and prevalence cases. We assessed the association between air pollution and first documented diabetes occurrence in a national U.S. cohort of older adults to estimate diabetes risk. We included all Medicare enrollees 65 years and older in the fee-for-service program, part A and part B, in the contiguous United States (2000–2016). Participants were followed annually until the first recorded diabetes diagnosis, end of enrollment, or death (264, 869, 458 person-years). We obtained annual estimates of fine particulate matter (PM_2.5), nitrogen dioxide (NO₂), and warm-months ozone (O₃) exposures from highly spatiotemporally resolved prediction models. We assessed the simultaneous effects of the pollutants on diabetes risk using survival analyses. We repeated the models in cohorts restricted to ZIP codes with air pollution levels not exceeding the national ambient air quality standards (NAAQS) during the study period. We identified 10, 024, 879 diabetes cases of 41, 780, 637 people (3.8% of person-years). The hazard ratio (HR) for first diabetes occurrence was 1.074 (95% CI 1.058; 1.089) for 5 μg/m³ increase in PM_2.5, 1.055 (95% CI 1.050; 1.060) for 5 ppb increase in NO₂, and 0.999 (95% CI 0.993; 1.004) for 5 ppb increase in O₃. Both for NO₂ and PM_2.5 there was evidence of non-linear exposure-response curves with stronger associations at lower levels (NO₂ ≤ 36 ppb, PM_2.5 ≤ 8.2 μg/m³). Furthermore, associations remained in the restricted low-level cohorts. The O₃-diabetes exposure-response relationship differed greatly between models and require further investigation. In conclusion, exposures to PM_2.5 and NO₂ are associated with increased diabetes risk, even when restricting the exposure to levels below the NAAQS set by the U.S. EPA.