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Type 2 or non-insulin-dependent diabetes mellitus (NIDDM) is the most common form of diabetes worldwide, affecting approximately 4% of the world's adult population. It is multifactorial in origin with both genetic and environmental factors contributing to its development. A genome-wide screen for type 2 diabetes genes carried out in Mexican Americans localized a susceptibility gene, designated NIDDM1, to chromosome 2. Here we describe the positional cloning of a gene located in the NIDDM1 region that shows association with type 2 diabetes in Mexican Americans and a Northern European population from the Botnia region of Finland. This putative diabetes-susceptibility gene encodes a ubiquitously expressed member of the calpain-like cysteine protease family, calpain-10 (CAPN10). This finding suggests a novel pathway that may contribute to the development of type 2 diabetes.