Background PPP1R3B has been suggested as a candidate gene for monogenic forms of diabetes as well as type 2 diabetes (T2D) due to its association with glycaemic trait and its biological role in glycogen synthesis. Objectives To study if rare missense variants in PPP1R3B increase the risk of maturity onset diabetes of the young (MODY), T2D or affect measures of glucose metabolism. Method Targeted resequencing of PPP1R3B was performed in 8,710 samples; MODY patients with unknown etiology (n = 54), newly diagnosed patients with T2D (n = 2,930) and population-based control individuals (n = 5,726, of whom n = 4,569 had normal glucose tolerance). All population-based sampled individuals were examined using an oral glucose tolerance test. Results Among n = 396 carriers, we identified twenty-three PPP1R3B missense mutations, none of which segregated with MODY. The burden of likely deleterious PPP1R3B variants was significantly increased with a total of 17 carriers among patients with T2D (0.58% (95% CI: 0.36–0.93)) compared to 18 carriers among non-diabetic individuals (0.31% (95% CI: 0.20–0.49)), resulting in an increased risk of T2D (OR (95% CI) = 2.57 (1.14–5.79), p = 0.02 (age and sex adjusted)). Furthermore, carriers with diabetes had less abdominal fat and a higher serum concentration of LDL-cholesterol compared to patients with T2D without rare missense PPP1R3B variants. In addition, non-diabetic carriers had a higher birth weight compared to non-carriers. Conclusion Rare missense PPP1R3B variants may predispose to T2D.