Purpose: Steroid-induced diabetes mellitus (SIDM) is a well-known side effect of corticosteroid agents. While diabetes induced by systemic corticosteroids has been extensively studied for over 60 years, evidence regarding the association between topical corticosteroids and type 2 diabetes remains limited. This study aimed to investigate the relationship between topical corticosteroid use and the risk of type 2 diabetes. Methods: A nationwide, population-based cohort study was conducted using data from the Korea National Health Insurance Service National Sample Cohort Database (NHIS-NSC2). A total of 186,057 adults with new-onset type 2 diabetes were identified as case subjects. Among these, 171,113 adults who had been treated with topical corticosteroids and 14,944 adults with no history of topical corticosteroid use were included and followed prospectively for approximately 9 years. The primary outcome was the incidence of type 2 diabetes following topical corticosteroid use, with additional analyses by frequency and potency of corticosteroid use. Kaplan-Meier curves and Cox proportional hazard models were used to estimate hazard ratios (HR) for type 2 diabetes. Results: The use of topical corticosteroids was significantly associated with an increased risk of type 2 diabetes (adjusted hazard ratio [aHR] 1.13, 95% CI 1.06–1.20). The high-frequency corticosteroid group demonstrated the highest risk (aHR 1.27, 95% CI 1.09–1.48), while the moderate-potency corticosteroid group also showed a significant increase in risk (aHR 1.15, 95% CI 1.04–1.27). Notably, the diabetes risk in the moderate-potency group was comparable to that observed in the systemic corticosteroid group (aHR 1.20, 95% CI 1.14–1.26). Conclusion: In this study, the use of topical corticosteroids was significantly associated with the incidence of type 2 diabetes. These findings highlight the importance of considering diabetes risk factors when prescribing topical corticosteroids.