The objective of this study was to examine relationships between impaired glucose tolerance (IGT) and body composition and insulin-related phenotypes in 150 overweight Latino children with a family history of type 2 diabetes. Glucose tolerance was assessed by an oral glucose challenge. Body composition was assessed by dual energy x-ray absorptiometry and magnetic resonance imaging. Insulin sensitivity, the acute insulin response, and the disposition index (DI), as an index of beta-cell function, were determined by an iv glucose tolerance test and compared between normal glucose-tolerant and IGT children. IGT was present in 28% of children, and was similar across obesity groups, but higher in children exposed to gestational diabetes mellitus (41% IGT). There were no significant differences in body composition, fat distribution, insulin sensitivity, or acute insulin response, but DI was significantly lower in IGT children by 16% (P < 0.02), and DI was inversely related to age. In conclusion, IGT is present in 28% of overweight Latino children with a family history of type 2 diabetes, is not influenced by obesity, is more prevalent in children exposed to gestational diabetes mellitus, and is related to poor beta-cell function, which shows signs of deterioration with age in this population.