BACKGROUND: Penetration and participation of real life implementation of lifestyle change programs to prevent type 2 diabetes has been challenging. This is particularly so among low income individuals in the United States. The purpose of this study is to examine the effectiveness of financial incentives on attendance and weight loss among Medicaid beneficiaries participating in the 12-month Diabetes Prevention Program (DPP). METHODS: This is a cluster-randomized controlled trial with two financial incentive study arms and an attention control study arm. Medicaid beneficiaries with prediabetes from 13 primary care clinics were randomly assigned to individually earned incentives (IND; 33 groups; n = 309), a hybrid of individual- and group-earned incentives (GRP; 30 groups; n = 259), and an attention control (AC; 30 groups; n = 279). Up to $520 in incentives could be earned for attaining attendance and weight loss goals over 12 months. Outcomes are percent weight loss from baseline, achieving 5% weight loss from baseline, and attending 75% of core and 75% of maintenance DPP sessions. Linear mixed models were used to examine weight change and attendance rates over the 16 weeks and 12 months. RESULTS: The percent weight change at 16 weeks for the IND, GRP, and AC participants were similar, at - 2.6, - 3.1%, and - 3.4%, respectively. However, participants achieving 5% weight loss in the IND, GRP, and AC groups was 21.5, 24.0% (GRP vs AC, P < 0.05), and 15.2%. Attendance at 75% of the DPP core sessions was significantly higher among IND (60.8%, P < 0.001) and GRP (64.0%, P < 0.001) participants than among AC (38.6%) participants. Despite substantial attrition over time, attendance at 75% of the DPP maintenance sessions was also significantly higher among IND (23.0%, P < 0.001) and GRP (26.1%, P < 0.001) participants than among AC (11.0%) participants. CONCLUSIONS: Financial incentives can improve the proportion of Medicaid beneficiaries attending the 12-month DPP and achieving at least 5% weight loss. TRIAL REGISTRATION: ClinicalTrials.gov NCT02422420 ; retrospectively registered April 21, 2015.