Survival following lung transplant (LTx) remains significantly lower than after other solid organ transplants. Diabetes mellitus (DM) is a mortality risk factor not comprehensively studied in LTx recipients. Notably, neither the relation of time of DM onset to survival nor the actual causes of DM-associated excess mortality have been described. We determined DM status, DM diagnosis date and all-cause mortality in 386 consecutive adults who underwent LTx at our institution from January 1, 2001 to July 31, 2010. The relationship of DM to survival both as a categorical and time-dependent variable was studied. Fifty-three percent of patients had DM. Overall median survival was 5.2 (95% CI 3.8–6.6) years. At study end, 52% of patients had died, of whom 64% had DM. Estimated median survival was 10 years in patients without DM, 5.0 (3.3–6.8) years in patients with DM pre- and post-LTx and 4.3 (3.1–5.5) years in patients with new onset DM. As a time-dependent covariate, DM was the strongest risk factor for mortality, hazard ratio 3.96 (2.85–5.51). Bronchiolitis obliterans syndrome was the main cause of death in all patients surviving >90 days, but its incidence was not increased in patients with DM. Further studies are warranted to determine whether improved glycemic control could improve outcomes in LTx recipients.