Background Diabetes is a metabolic disorder, characterized by hyperglycemic state of the body. A silent killer, which can take the lives of victims if undiagnosed at the earliest stage. Prediabetes has become an important health concern across countries due to its huge potential for the development of diabetes and other complications. The objectives of this study were to determine the prevalence of prediabetes and diabetes and its associated factors among rural fishing communities in Penang, Malaysia.Methods A cross-sectional study was conducted among fishing communities in Southwest District of Penang, Malaysia from August to November 2017. Blood sample (finger prick test) and physical examination were performed on sample of 168 participants consented in this study. Pre-validated Malay versions of International Physical Activity 7 (IPAQ-7) and Perceived Stress Scale (PSS) questionnaires were used to assess the level of physical activity and stress levels of the participants. Multinomial logistic regression models were fitted to identify factors associated with prediabetes and diabetes.Results The prevalence of diabetes and prediabetes were 19.6% (95% CI: 14.3, 26.4) and 10.12% (95% CI: 6.4, 15.7)  respectively. The median physical activity (interquartile range) in MET-minutes per week for those with diabetes (1071.0 (2120.0)) and prediabetes (1314.0 (1710.0)) was generally lower as compared to non-diabetes. Majority reported moderate stress (57.3%) from PSS system. Abdominal obesity, family history of diabetes and being hypertensive were significant factors associated with diabetes; while older age, bigger waist circumference and self-perceived  poor routine diet were  factors associated with prediabetes.Conclusions The screening for prediabetes in this population gives the opportunity to implement lifestyle interventions at the earliest possible, which could prevent the development of diabetes. The identification of diabetic individuals provides an opportunity to conduct health promotion and education to ensure good metabolic control and hence reduce the risks of complications.