The condition occurs when the body cannot make enough insulin to regulate blood sugar levels.
It is often linked to obesity and is most commonly seen in adults, where it can lead to a range of health problems such as heart disease and strokes.
Some 715 people under the age of 25 received treatment for the disease in England and Wales during 2016/17 and 78.6% of them were obese.
The number of cases is up from the 507 registered in 2013/14, according to the Royal College of Paediatrics and Child Health.
But the true number may be much higher, as the RCPCH recorded only those young people being treated in paediatric units, not by a GP.
Professor Russell Viner, president of the RCPCH, said: “A rise in Type 2 diabetes of this magnitude is alarming and shows that the childhood obesity epidemic is starting to bite.
“It’s also concerning that we might not be seeing the full picture.”
The Local Government Association, which represents 370 councils in England and Wales, said more support was needed, especially for obese children and ethnic minorities, as almost half of those treated in 2016/17 were black or Asian.
Izzi Seccombe, chairwoman of the LGA’s community wellbeing board, said: “These figures are a sad indictment of how we have collectively failed as a society to tackle childhood obesity, one of the biggest health challenges we face.”
She called for “urgent action”, saying: “Type 2 diabetes can be a lifelong debilitating illness and these figures will only multiply if we delay.
“Councils with their public health responsibilities are on the frontline fighting obesity but for this to work effectively they need to be properly resourced.
“Cutting their public health funding is short-sighted and undermines any attempt to help our children live healthy and fulfilling lives.”
Kathryn Kirchner, clinical advisor at Diabetes UK, said: “These figures are a stark reminder that we have a collective responsibility to push for the actions outlined in the most recent chapter of Childhood Obesity Plan, including clearer and more consistent food labelling.”
A Department of Health and Social Care spokeswoman said the government was determined to halve childhood obesity by 2030.
“We’ve invested billions in public health services and have already removed the equivalent of 45 million kilograms of sugar from soft drinks every year,” she said.
“Our new childhood obesity plan will now get children exercising more in schools and reduce their exposure to sugary and fatty foods.”