Glycemic disorders resolve following Roux-en-Y gastric bypass (RYGB) surgery, but early and longer-term mechanisms regarding effects on β-cell dysfunction as well as relationships with decreasing adiposity are not well understood. We evaluated longitudinal changes in peripheral insulin sensitivity (Si), the acute insulin response to glucose (AIRg), and the composite estimate of β-cell function, the disposition index (DI), over 24 mo via frequently sampled intravenous glucose tolerance testing in severely obese women who had fasting normoglycemia (n = 16) and hyperglycemia (n = 11) before RYGB surgery; homeostatic model assessment (HOMA-IR) estimated insulin resistance; air displacement plethysmography determined adipose tissue mass. At baseline, subjects with normoglycemia had adequate DI associated with elevated AIRg, but DI was markedly reduced in subjects with hyperglycemia. Within 1-6 mo post-RYGB, glycemic control was normalized in subjects with hyperglycemia related to reduced HOMA-IR (-54% at 1 mo, P < 0.005) and increased DI (23-fold at 6 mo vs. baseline, P < 0.05). Over 24 mo, DI improved in subjects with hyperglycemia (15-fold vs. baseline, P < 0.005) and also modestly in subjects with normoglycemia (58%, P < 0.05), due largely to increased Si. Decreasing adiposity correlated with longer-term HOMA-IR and Si values at 6 and 24 mo, respectively. In patients exhibiting fasting hyperglycemia before surgery, β-cell function improved early following RYGB, due largely to increases in insulin secretion. For both normoglycemic and hyperglycemic subjects, further improvement or stabilization of β-cell function over the 2 yr is due largely to improved Si associated with reduced adiposity.