The transcription factor 7-like 2 (TCF7L2) rs7903146 T allele was previously associated with type 2 diabetes (T2D) and decreased BMI whereas haplotypes carrying the rs7903146 C and rs10885406 A alleles (HapA) were associated with increased BMI. The functional relevance of TCF7L2 polymorphisms and their effects on T2D and obesity remained to be further investigated. In white European populations, we found that the rs7903146 T allele was more associated with T2D in 3,547 non-obese individuals (odds ratio (OR) = 1.88 (1.69-2.10)) than in 1,110 class III obese subjects (OR = 1.24 (1.03-1.50)). No direct effect of the rs7903146 C allele and HapA was found on any form of obesity in 3,507 normal glucose tolerant (NGT) individuals, 1,106 pedigrees with familial obesity and 5,512 individuals from the French general population. However, in T2D subjects, the rs7903146 C allele was less prevalent in the 1,111 non-obese individuals (55.2%) compared to 659 class III obese subjects (67.5% OR = 1.69 (1.46-1.95)). Functional studies showed that the rs7903146 T allele is less prone to be bound by protein factors than the C allele in 3T3-L1, HepG2 and beta-TC3 cell lines and that TCF7L2 expression decreases in subcutaneous adipose tissue from NGT obese T/T carriers under calorie restriction. In conclusion, TCF7L2 is not a risk factor for obesity in European populations, but its effect on T2D risk is modulated by obesity. Furthermore, our data suggest that the rs7903146 T allele may be possibly functional and associated with a nominal decrease in TCF7L2 expression in adipose tissue of individuals under calorie restriction.