Both obesity and a family history of diabetes reduce insulin sensitivity, but the impact of obesity on insulin secretion among individuals predisposed to diabetes is uncertain. We used a pedigree-based approach to test the hypothesis that beta-cell compensation to the insulin resistance associated with obesity is defective among individuals predisposed to diabetes by virtue of a strong family history of type 2 diabetes before the development of diabetes or glucose intolerance. A total of 126 members of 26 families ascertained for at least a sib pair with type 2 diabetes with onset before age 65 years underwent a tolbutamide-modified frequently sampled intravenous glucose tolerance test (FSIGT). Family members included 26 individuals with impaired glucose tolerance and 100 individuals with normal glucose tolerance (NGT). The acute insulin response to glucose (AIRglucose) was determined and insulin sensitivity (S(I)) estimated by minimal model analysis of FSIGT data. The beta-cell compensation for insulin sensitivity was estimated from the disposition index (DI), calculated as the product of S(I) and AIRglucose. Obesity was measured by BMI. Among all individuals, BMI was a significant predictor of both S(I) and AIRglucose, as expected. However, BMI also significantly predicted DI (P = 0.002) after correcting for age, sex, family membership, and glucose tolerance status. The relationship of BMI and DI was confirmed in 85 individuals with NGT who were aged <45 (P = 0.002) but not in 91 unrelated control individuals without a family history of diabetes. When normoglycemic individuals aged <45 were separated into three classes by BMI (< or =27, 27-30, >30), S(I) decreased progressively and significantly with obesity whereas AIRglucose rose significantly from lean to most obese classes. In contrast to the expectation of complete beta-cell compensation with obesity D1 fell significantly (P = 0.004) among obese family members. This relationship was not observed in control subjects. Individuals with a genetic predisposition to diabetes show a reduced beta-cell compensatory response to the reduced insulin sensitivity associated with obesity. We propose that this impaired compensation may be one manifestation of the underlying genetic defect in susceptible individuals. This finding helps explain the multiplicative effects of family history and obesity on risk of type 2 diabetes.