A positional cloning study of type 2 diabetes in Mexican Americans identified a region, termed "NIDDM1," on chromosome 2q37 with significant linkage evidence. Haplotype combinations at the calpain-10 gene (CAPN10) within this region were shown to increase diabetes risk in several populations. On the basis of the thrifty genotype hypothesis, variants that increase susceptibility to type 2 diabetes under modern lifestyle conditions provided a survival advantage in past environments by increasing the efficiency of energy use and storage. Here, our goal is to make inferences about the evolutionary forces shaping variation in genes in the NIDDM1 region and to investigate the population genetics models that may underlie the thrifty genotype hypothesis. To this end, we surveyed sequence variation in CAPN10 and in an adjacent gene, G-protein-coupled receptor 35 (GPR35), in four population samples from different ethnic groups. These data revealed two distinct deviations from the standard neutral model in CAPN10, whereas GPR35 variation was largely consistent with neutrality. CAPN10 showed a significant deficit of variation in the haplotype class defined by the derived allele at SNP44, a polymorphism that is significantly associated with diabetes in meta-analysis studies. This suggests that this haplotype class was quickly driven to high frequency by positive natural selection. Interestingly, the derived allele at SNP44 is protective against diabetes. CAPN10 also showed a local excess of polymorphism and linkage disequilibrium decay in intron 13. Simulations show that this pattern may be explained by long-standing balancing selection that maintains multiple selected alleles. Alternatively, it is possible that the local mutation and recombination rates changed since the divergence of human and chimpanzee; this scenario does not require the action of natural selection on intron 13 variation.