Aims Conventional definitions of obesity, e.g. body mass index (BMI) ≥ 30 kg/m2 or waist circumference cut‐points of 102 cm (men) and 88 cm (women), may underestimate metabolic risk in non‐Europeans. We prospectively identified equivalent ethnicity‐specific obesity cut‐points for the estimation of diabetes risk in British South Asians, African‐Caribbeans and Europeans. Methods We studied a population‐based cohort from London, UK (1356 Europeans, 842 South Asians, 335 African‐Caribbeans) who were aged 40–69 years at baseline (1988–1991), when they underwent anthropometry, fasting and post‐load (75 g oral glucose tolerance test) blood tests. Incident Type 2 diabetes was identified from primary care records, participant recall and/or follow‐up biochemistry. Ethnicity‐specific obesity cut‐points in association with diabetes incidence were estimated using negative binomial regression. Results Diabetes incidence rates (per 1000 person years) at a median follow‐up of 19 years were 20.8 (95% CI: 18.4, 23.6) and 12.0 (8.3, 17.2) in South Asian men and women, 16.5 (12.7, 21.4) and 17.5 (13.0, 23.7) in African‐Caribbean men and women, and 7.4 (6.3, 8.7), and 7.2 (5.3, 9.8) in European men and women. For incidence rates equivalent to those at a BMI of 30 kg/m2 in European men and women, age‐ and sex‐adjusted cut‐points were: South Asians, 25.2 (23.4, 26.6) kg/m2; and African‐Caribbeans, 27.2 (25.2, 28.6) kg/m2. For South Asian and African‐Caribbean men, respectively, waist circumference cut‐points of 90.4 (85.0, 94.5) and 90.6 (85.0, 94.5) cm were equivalent to a value of 102 cm in European men. Waist circumference cut‐points of 84.0 (74.0, 90.0) cm in South Asian women and 81.2 (71.4, 87.4) cm in African‐Caribbean women were equivalent to a value of 88 cm in European women. Conclusions In prospective analyses, British South Asians and African‐Caribbeans had equivalent diabetes incidence rates at substantially lower obesity levels than the conventional European cut‐points. What's new? Ethnicity‐appropriate obesity cut‐points as predictors of diabetes risk are much debated. Few longitudinal studies have addressed this topic, and none in the UK. This study followed a group of over 2500 people from three ethnic backgrounds for 19 years and identified that BMI levels of 25 kg/m2 in South Asians and 27 kg/m2 in African Caribbeans posed equivalent risk of developing diabetes to BMI of 30 kg/m2 in Europeans. Waist circumference equivalents were also lower in South Asians and African Caribbeans. These findings highlight the potential importance of public health measures for the prevention of metabolic risk long before the current conventional cut‐points for obesity are reached in South Asian and African‐Caribbean populations.