Background: Randomized trials of postmenopausal hormone therapy have found differing effects on fasting glucose levels. No trial has evaluated the effect of hormone therapy on diabetes incidence. Objective: To evaluate the effect of hormone therapy on fasting glucose level and incident diabetes. Design: Randomized, double-blind, placebo-controlled trial. Setting: 20 U.S. clinical centers. Participants: 2763 postmenopausal women with coronary heart disease who were followed for 4.1 years. At baseline, 734 women had diabetes, 218 women had impaired fasting glucose, and 1811 women were normoglycemic; the 2029 women without diabetes were followed for incident diabetes. Intervention: 0.625 mg of conjugated estrogen plus 2.5 mg of medroxyprogesterone acetate daily, or placebo. Measurements: Fasting glucose level was measured at baseline, at year 1, and at the end of the trial. Incident diabetes was defined by self-report of diabetes or disease complication, fasting glucose level of 6.9 mmol/L or greater (≥126 mg/dL), or initiation of therapy with diabetes medication. Results: Fasting glucose levels increased significantly among women assigned to placebo but did not change among women receiving hormone therapy. The incidence of diabetes was 6.2% in the hormone therapy group and 9.5% in the placebo group (relative hazard, 0.65 [95% Cl, 0.48 to 0.89]; P = 0.006). The number needed to treat for benefit to prevent one case of diabetes was 30 (Cl, 18 to 103). Changes in weight and waist circumference did not mediate this effect. Conclusions: In women with coronary disease, hormone therapy reduced the incidence of diabetes by 35%. This observation provides important insights into the metabolic effects of postmenopausal hormones but is insufficient to recommend the use of hormones for secondary prevention of heart disease.