This study examined the association between parity and incident type 2 diabetes in older Chinese women and estimated the mediation effect of adiposity indicators. A total of 11,473 women without diabetes at baseline from 2003 to 2008 were followed up until 2012. We used Cox proportional hazards regression to assess the association between parity and incident type 2 diabetes, and mediation analysis to estimate the mediation effect of adiposity indicators. Compared to women with one parity, the hazard ratio (HR) (95% confidence interval (CI)) for incident type 2 diabetes was 0.85 (0.44–1.63), 1.20 (1.11–1.30), 1.28 (1.16–1.41) and 1.27 (1.14–1.42) for women with parity of 0, 2, 3, and ≥ 4, respectively. The proportion of indirect effect (95% CI) mediated by body mass index, waist circumference, hip circumference, waist-to-hip ratio, waist-to-height ratio and body fat percentage was 26.5% (19.2–52.2%), 54.5% (39.4–108.7%), 25.1% (18.2–49.1%), 35.9% (25.6–74.1%), 50.3% (36.5–98.6%) and 15.1% (− 66.4 to 112.3%), respectively. Compared to women with one parity, women with multiparity (≥ 2) had a higher risk of incident type 2 diabetes and up to half of the association was mediated by abdominal obesity.