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Background: Observational studies and conventional Mendelian randomization (MR) studies showed inconclusive evidence to support the association between omega-3 fatty acids and type 2 diabetes. We aim to evaluate the causal effect of omega-3 fatty acids on type 2 diabetes mellitus (T2DM), and the distinct intermediate phenotypes linking the two. Methods: Two-sample MR was performed using genetic instruments derived from a recent genome-wide association study (GWAS) of omega-3 fatty acids (N = 114,999) from UK Biobank and outcome data obtained from a large-scale T2DM GWAS (62,892 cases and 596,424 controls) in European ancestry. MR-Clust was applied to determine clustered genetic instruments of omega-3 fatty acids that influences T2DM. Two-step MR analysis was used to identify potential intermediate phenotypes (e.g. glycemic traits) that linking omega-3 fatty acids with T2DM. Results: Univariate MR showed heterogenous effect of omega-3 fatty acids on T2DM. At least two pleiotropic effects between omega-3 fatty acids and T2DM were identified using MR-Clust. For cluster 1 with seven instruments, increasing omega-3 fatty acids reduced T2DM risk (OR: 0.52, 95%CI 0.45–0.59), and decreased HOMA-IR (β = − 0.13, SE = 0.05, P = 0.02). On the contrary, MR analysis using 10 instruments in cluster 2 showed that increasing omega-3 fatty acids increased T2DM risk (OR:1.10; 95%CI 1.06–1.15), and decreased HOMA-B (β = − 0.04, SE = 0.01, P = 4.52 × 10–5). Two-step MR indicated that increasing omega-3 fatty acid levels decreased T2DM risk via decreasing HOMA-IR in cluster 1, while increased T2DM risk via decreasing HOMA-B in cluster 2. Conclusions: This study provides evidence to support two distinct pleiotropic effects of omega-3 fatty acids on T2DM risk influenced by different gene clusters, which could be partially explained by distinct effects of omega-3 fatty acids on insulin resistance and beta cell dysfunction. The pleiotropic feature of omega-3 fatty acids variants and its complex relationships with T2DM need to be carefully considered in future genetic and clinical studies. [ABSTRACT FROM AUTHOR]