To date, the association between diabetes mellitus (DM) and gastric cancer has been controversial, including the underlying mechanism. We investigated the association between plasma diabetic biomarkers (insulin, C‐peptide, and blood glucose) and gastric cancer risk. In addition, homeostasis model assessment of insulin resistance (HOMA‐IR) and homeostasis model assessment of β‐cell function (HOMA‐β) were calculated. A total of 36,745 subjects aged 40–69 years in the Japan Public Health Center‐based prospective study (JPHC) who returned the baseline questionnaire and provided blood samples were followed from 1990 to 2004. In the present analysis, 477 cases and 477 matched controls were used. The odds ratios (ORs) and their corresponding 95% confidence intervals (CIs) for developing gastric cancer were calculated using conditional logistic regression models. Plasma insulin was positively associated with increased risk of gastric cancer; compared to tertile 1, ORs were 1.69 (95% CI = 1.11–2.59) and 2.01 (1.19–3.38) for tertiles 2 and 3, respectively (p for trend = 0.009). In men, C‐peptide was also positively associated with a significant risk; corresponding ORs were 1.42 (0.85–2.38) and 1.91 (1.03–3.54), respectively (p for trend = 0.04). These findings were confirmed for blood samples from the fasting group (≥8 hr after a meal). Higher HOMA‐IR was also associated with increased risk, whereas no association was observed for blood glucose. Our findings suggest that Japanese population with higher insulin and C‐peptide levels derived from insulin resistance have an elevated risk of gastric cancer. What's new? The idea that diabetes mellitus may play a role in some instances of gastric carcinogenesis is intriguing but controversial. Here, a positive association was identified for gastric cancer risk and plasma insulin levels, based on investigation of plasma biomarkers in a Japanese study population. The association was evident for measures of homeostasis model assessment of insulin resistance (HOMA‐IR). By contrast, no association was found for blood glucose levels. The results suggest that hyperinsulinemia derived from insulin resistance, rather than hyperglycemia, is important in gastric carcinogenesis.