Increased adiponectin levels have been shown to be associated with a lower risk of type 2 diabetes. To understand the relations between genetic variation at the adiponectin-encoding gene, ADIPOQ, and adiponectin levels, and subsequently its role in disease, we conducted a deep resequencing experiment of ADIPOQ in 14,002 subjects, including 12,514 Europeans, 594 African Americans, and 567 Indian Asians. We identified 296 single nucleotide polymorphisms (SNPs), including 30 amino acid changes, and carried out association analyses in a subset of 3,665 subjects from two independent studies. We confirmed multiple genome-wide association study findings and identified a novel association between a low-frequency SNP (rs17366653) and adiponectin levels (P = 2.2E–17). We show that seven SNPs exert independent effects on adiponectin levels. Together, they explained 6% of adiponectin variation in our samples. We subsequently assessed association between these SNPs and type 2 diabetes in the Genetics of Diabetes Audit and Research in Tayside Scotland (GO-DARTS) study, comprised of 5,145 case and 6,374 control subjects. No evidence of association with type 2 diabetes was found, but we were also unable to exclude the possibility of substantial effects (e.g., odds ratio 95% CI for rs7366653 [0.91–1.58]). Further investigation by large-scale and well-powered Mendelian randomization studies is warranted.