Both defective insulin secretion and insulin resistance have been reported in relatives of type 2 diabetic subjects. We tested 120 members of 26 families with a type 2 diabetic sibling pair with a tolbutamide-modified, frequently sampled i.v. glucose tolerance test to determine the insulin sensitivity index (S(I)) and acute insulin response to glucose (AIRglucose). A measure of beta-cell compensation for insulin sensitivity was calculated as the product S(I) x AIRglucose, based on the demonstrated hyperbolic relationship between insulin sensitivity and insulin secretion. A percentile score for this compensation was assigned based on published values. Of the 120 family members, 26 had previously diagnosed impaired glucose tolerance on oral testing, and 94 had normal glucose tolerance tests. As a group, family members showed a significantly lower S(I) x AIRglucose than a similar, previously reported, control population, even when impaired glucose tolerance members were excluded. We performed a multivariate analysis of diabetes status, S(I), AIRglucose and to estimate the heritability of each trait and the genetic and environmental correlations between traits. We estimated the heritability of S(I) x AIRglucose to be 67 +/- 3% when all members were included and 70 +/- 4% when only normal glucose tolerance members were considered. Both AIRglucose and S(I) were also familial, albeit with lower heritabilities (38 +/- 1% and 38 +/- 2%, respectively, for all family members). Both S(I) x AIRglucose and S(I) showed strong negative genetic correlations with diabetes (-85 +/- 3% and -87 +/- 2%, respectively, all family members), whereas AIRglucose did not correlate with diabetes. We conclude that insulin secretion, as measured by S(I) x AIRglucose, is decreased in nondiabetic members of familial type 2 diabetic kindreds, that S(I) x AIRglucose in these high risk families is highly heritable, and that the same polygenes may determine diabetes status and a low S(I) x AIRglucose. Our data suggest that insulin secretion, when expressed as an index normalized for insulin sensitivity, is more familial than either insulin sensitivity or first phase insulin secretion alone and may be a very useful trait for identifying genetic predisposition to type 2 diabetes.