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Type 2 diabetes (T2D) is a leading cause of death and disability worldwide. It is a chronic metabolic disorder that develops due to an interplay of genetic, lifestyle, and environmental factors. The biological onset of the disease occurs long before clinical symptoms develop, thus the search for early diagnostic and prognostic biomarkers, which could facilitate intervention strategies to prevent or delay disease progression, has increased considerably in recent years. Epigenetic modifications represent important links between genetic, environmental and lifestyle cues and increasing evidence implicate altered epigenetic marks such as DNA methylation, the most characterized and widely studied epigenetic mechanism, in the pathogenesis of T2D. This review provides an update of the current status of DNA methylation as a biomarker for T2D. Four databases, Scopus, Pubmed, Cochrane Central, and Google Scholar were searched for studies investigating DNA methylation in blood. Thirty-seven studies were identified, and are summarized with respect to population characteristics, biological source, and method of DNA methylation quantification (global, candidate gene or genome-wide). We highlight that differential methylation of the <i>TCF7L2, KCNQ1, ABCG1, TXNIP, PHOSPHO1, SREBF1, SLC30A8</i>, and <i>FTO</i> genes in blood are reproducibly associated with T2D in different population groups. These genes should be prioritized and replicated in longitudinal studies across more populations in future studies. Finally, we discuss the limitations faced by DNA methylation studies, which include including interpatient variability, cellular heterogeneity, and lack of accounting for study confounders. These limitations and challenges must be overcome before the implementation of blood-based DNA methylation biomarkers into a clinical setting. We emphasize the need for longitudinal prospective studies to support the robustness of the current findings of this review.