Background: Hispanics/Latinos in the United States experience both a health advantage and disadvantage in developing diabetes. Ethnic identity, a predictor of psychological well-being, has not been widely applied to physical health outcomes. The objective of this study is to apply what is known regarding ethnic identity and psychological health to physical health outcomes (diabetes) and to explore the moderating effect of education as a possible underlying mechanism of the Hispanic Health Advantage/Disadvantage. Specifically, this study examines (a) the association between ethnic identity and diabetes prevalence among adult Hispanics/Latinos and (b) determines whether education modifies this relationship. Method: Data come from the nationally representative adult U.S. household study, National Latino and Asian American Study (NLAAS), collected in 2001 to 2003 (N = 1,746). Multiple logistic regression was conducted to examine the relationship between ethnic identity, education, and their interaction with likelihood of diabetes. Results: Hispanics/Latinos with high ethnic identity have a higher odds of reporting diabetes among those with 13 to 15 years of education (odds ratio: 1.84; 95% confidence interval: 1.16-2.92) and a lower odds among those with 16+ years of education (odds ratio: 0.53; 95% confidence interval: 0.34-0.84). Ethnic identity is associated with diabetes prevalence and the relationship is moderated by educational attainment. Conclusion: Given the growth, diversity, and diabetes disparities among Hispanics/Latinos, our buffering and exacerbating findings exemplify the complexity and fluidity of theory in understanding psychological/behavioral processes. The findings highlight the importance of designing targeted health interventions that take into account the diverse psychosocial and educational experiences of Hispanics/Latinos.