Epidemiological and clinical studies have indicated that nut consumption could be a healthy dietary strategy to prevent and treat type 2 diabetes (T2DM) and related cardiovascular disease (CVD). The objective of this review is to examine the potential mechanisms of action of nuts addressing effects on glycemic control, weight management, energy balance, appetite, gut microbiota modification, lipid metabolism, oxidative stress, inflammation, endothelial function and blood pressure with a focus on data from both animal and human studies. The favourable effects of nuts could be explained by the unique nutrient composition and bioactive compounds in nuts. Unsaturated fatty acids (monounsaturated fatty acids and polyunsaturated fatty acids) present in nuts may play a role in glucose control and appetite suppression. Fiber and polyphenols in nuts may also have an anti-diabetic effect by altering gut microbiota. Nuts lower serum cholesterol by reduced cholesterol absorption, inhibition of HMG-CoA reductase and increased bile acid production by stimulation of 7-α hydroxylase. Arginine and magnesium improve inflammation, oxidative stress, endothelial function and blood pressure. In conclusion, nuts contain compounds that favourably influence glucose homeostasis, weight control and vascular health. Further investigations are required to identify the most important mechanisms by which nuts decrease the risk of T2DM and CVD.