First-degree relatives of individuals with type 2 diabetes are at increased risk of developing hyperglycemia. To examine the prevalence and pathogenesis of abnormal glucose homeostasis in these subjects, 531 first-degree relatives with no known history of diabetes (aged 44.1 +/- 0.7 years; BMI 29.0 +/- 0.3 kg/m(2)) underwent an oral glucose tolerance test (OGTT). Newly identified diabetes was found in 19% (n = 100), and impaired fasting glucose (IFG) and/or impaired glucose tolerance (IGT) was found in 36% (n = 191). Thus, only 45% (n = 240) had normal glucose tolerance (NGT). The homeostasis model assessment of insulin resistance (HOMA-IR) was used to estimate insulin sensitivity; beta-cell function was quantified as the ratio of the incremental insulin to glucose responses over the first 30 min during the OGTT (DeltaI(30)/DeltaG(30)). This latter measure was also adjusted for insulin sensitivity as it modulates beta-cell function ([DeltaI(30)/DeltaG(30)]/HOMA-IR). Decreasing glucose tolerance was associated with increasing insulin resistance (HOMA: NGT 12.01 +/- 0.54 pmol/mmol; IFG/IGT 16.14 +/- 0.84; diabetes 26.99 +/- 2.62; P < 0.001) and decreasing beta-cell function (DeltaI(30)/DeltaG(30): NGT 157.7 +/- 9.7 pmol/mmol; IFG/IGT 100.4 +/- 5.4; diabetes 57.5 +/- 7.3; P < 0.001). Decreasing beta-cell function was also identified when adjusting this measure for insulin sensitivity ([DeltaI(30)/DeltaG(30)]/HOMA-IR). In all four ethnic groups (African-American, n = 55; Asian-American, n = 66; Caucasian, n = 217; Hispanic-American, n = 193), IFG/IGT and diabetic subjects exhibited progressively increasing insulin resistance and decreasing beta-cell function. The relationships of insulin sensitivity and beta-cell function to glucose disposal, as measured by the incremental glucose area under the curve (AUCg), were examined in the whole cohort. Insulin sensitivity and AUCg were linearly related so that insulin resistance was associated with poorer glucose disposal (r(2) = 0.084, P < 0.001). In contrast, there was a strong inverse curvilinear relationship between beta-cell function and AUCg such that poorer insulin release was associated with poorer glucose disposal (log[DeltaI(30)/DeltaG(30)]: r(2) = 0.29, P < 0.001; log[(DeltaI(30)/DeltaG(30))/HOMA-IR]: r(2) = 0.45, P < 0.001). Thus, abnormal glucose metabolism is common in first-degree relatives of subjects with type 2 diabetes. Both insulin resistance and impaired beta-cell function are associated with impaired glucose metabolism in all ethnic groups, with beta-cell function seeming to be more important in determining glucose disposal.