Aims To estimate the incidence of Type 2 diabetes in children aged <17 years, compare this with similar data 10 years ago, and characterize clinical features at diagnosis in the UK and Republic of Ireland. Methods Using the British Paediatric Surveillance Unit reporting framework, cases of Type 2 diabetes diagnosed in children aged <17 years between 1 April 2015 and 30 April 2016 were reported each month. Results A total of 106 cases were reported, giving a UK incidence of 0.72/100 000 (95% CI 0.58–0.88). Children from ethnic minorities had significantly higher incidence compared with white children (0.44/100 000) with rates of 2.92/100 000 and 1.67/100 000, in Asian and BACBB (black/African/Caribbean/black British) children respectively. Sixty‐seven percent were girls and 81% had a family history of Type 2 diabetes. The mean BMI sd score at diagnosis was 2.89 (2.88, girls; 2.92, boys); 81% were obese. Children of Asian ethnicity had a significantly lower BMI sd score compared with white children (P<0.001). There was a trend in increased incidence from 2005 to 2015, with a rate ratio of 1.35 (95% CI 0.99–1.84), although this was not statistically significant (P=0.062). There was statistical evidence of increased incidence among girls (P=0.03) and children of South‐Asian ethnicity (P=0.01) when comparing the 2005 and 2015 surveys. Conclusions Type 2 diabetes remains far less common than Type 1 diabetes in childhood in the UK, but the number of cases continues to rise, with significantly increased incidence among girls and South‐Asian children over a decade. Female gender, family history, non‐white ethnicity and obesity were found to be strongly associated with the condition. What's new? The 2015/2016 UK incidence of Type 2 diabetes in children aged <17 years was 0.72 per 100 000 per year The incidence of Type 2 diabetes amongst girls and South‐Asian children has risen significantly over the last decade. Female gender, family history, non‐white ethnicity and obesity were strongly associated with Type 2 diabetes in childhood. Comorbidities are commonly identified at diagnosis, including 37% with non‐alcoholic fatty liver disease and 21% with hypertension The most common presenting complaint at diagnosis after osmotic symptoms (polyuria, polydipsia and weight loss) was recurrent, mainly genital, infections, although over a third of cases were asymptomatic and detected on obesity screening investigations