To evaluate the factors causing glucose intolerance in type 2 diabetes in Japan, insulin secretion and insulin sensitivity were compared across the range of glucose tolerance. Subjects were divided into 3 groups: normal glucose tolerance (NGT), impaired glucose tolerance (IGT), and type 2 diabetes (DM) according to the criteria of the World Health Organization (WHO). We examined insulin secretion and insulin sensitivity using fasting blood glucose and insulin levels and 75 g oral glucose tolerance test (OGTT). We used homeostasis model assessment (HOMA) beta-cell and insulinogenic index (30 minutes) to estimate insulin secretion and HOMA-insulin resistance (IR) and insulin sensitivity index (ISI) composite for insulin sensitivity. Although insulin resistance plays an important role in the development of diabetes in many ethnic populations, the differences in insulin sensitivity between NGT and IGT and between IGT and DM are small in Japanese patients. On the other hand, as glucose intolerance increases, insulin secretion decreases most remarkably both between NGT and IGT and between IGT and DM in Japanese patients. Decreasing insulin secretion and decreasing insulin sensitivity both occur in developing type 2 diabetes in Japanese patients, but decreased basal and early-phase insulin secretion had more pronounced contribution to glucose tolerance than the indices of insulin sensitivity. Japanese type 2 diabetic patients are characterized by a larger decrease in insulin secretion and show less attribution of insulin resistance.