The insulin gene variable number tandem repeat (INS-VNTR) is proposed to exert pleiotropic genetic effects on birth weight and diabetes susceptibility. In our study, we examined the influence of a polymorphism in tight linkage disequilibrium with INS-VNTR (-23Hph1) on birth weight and type 2 diabetes in the Pima population. A parent-offspring "trio" design was used to assess parent-of-origin effects and population stratification. The presence of the -23Hph1 T-allele was associated with lower birth weight (n = 192; -140 g per copy of the T-allele; P = 0.04), even after adjustment for effects of population stratification (P = 0.03). The effects of paternally transmitted T-alleles were greater than those of maternally transmitted alleles (paternally transmitted: -250 g, P = 0.05; maternally transmitted: -111 g, P = 0.43), but this difference was not statistically significant (P = 0.50). The -23Hph1 T-allele was associated with an increased prevalence of type 2 diabetes (P = 0.009), which family-based association analysis suggested was attributable to population structure (P = 0.04) without significant evidence of linkage disequilibrium between diabetes prevalence and genotype (P = 0.86). Thus allelic variation of the INS gene is associated with lower birth weight and increased prevalence of type 2 diabetes. Significant linkage disequilibrium was found between -23Hph1 and birth weight but not type 2 diabetes, an observation that supports a potential functional role of INS polymorphisms in the regulation of birth weight.