Vietnamese immigrants in Australia represent the second largest Vietnamese community in developed countries, following the United States. However, limited information is available about prevalence of type 2 diabetes (T2D) and the relative roles of socio-demographic characteristics, lifestyle factors, and Vietnamese ethnicity per se in this population. This study investigated the prevalence of T2D and its risk factors in older Vietnam-born Australians, in comparison to native-born Australians. The study used baseline questionnaire data from 787 Vietnam- and 196,866 Australia-born individuals (≥45 years), who participated in the 45 and Up Study, which is Australia's largest population-based cohort study. Country of birth specific prevalence of T2D and its risk factors were age-standardised to the 2006 Australian population (≥45 years). Multivariable logistic regression models were built for each group to assess the relationship between T2D and socio-demographic characteristics, family history of diabetes, lifestyle factors and health status. Compared to Australia-born counterparts, Vietnam-born individuals had significantly (p < 0.001) higher age-standardised prevalence of T2D (14.7 vs 7.4 %) and significantly (p < 0.001) lower levels of vegetable consumption (≥5 serves/day, 19.4 vs 33.5 %), physical activity (≥5 sessions/week, 68.7 vs 78.5 %) and overweight and obesity (body mass index ≥25 kg/m(2), 21.5 vs 62.7 %). The increased risk of T2D associated with a family history of diabetes for Vietnam-born people [adjusted odds ratio (OR) 7.14, 95 % CI 4.15-12.28] was almost double that for Australia-born people (OR 3.77, 95 % CI 3.63-3.90). The patterns of association between T2D and other factors were similar between the two groups. The findings suggest a genetic predisposition to T2D in people of Vietnamese ethnicity. Reducing lifestyle risk factors for diabetes and better management of diabetes are priorities for Vietnam-born populations.