The nature of the progressive beta-cell failure occurring as normal glucose tolerant (NGT) individuals progress to type 2 diabetes (T2DM) is incompletely understood. We measured insulin sensitivity (by a euglycemic insulin clamp) and insulin secretion rate (by deconvolution of plasma C-peptide levels during an oral glucose tolerance test) in 188 subjects [19 lean NGT (body mass index [BMI] </= 25 kg/m(2)), 42 obese NGT, 22 BMI-matched impaired glucose tolerance [IGT], and 105 BMI-matched T2DM]. Main determinants of beta-cell function on the oral glucose tolerance test were derived from a mathematical model featuring the following: 1) glucose concentration-insulin secretion dose response (glucose sensitivity), 2) a secretion component proportional to the derivative of plasma glucose concentration (rate sensitivity); and 3) a potentiation factor. When NGT and T2DM were subgrouped by 2-h plasma glucose concentrations, insulin secretion rate revealed an inverted U-shaped pattern, rising through NGT up to IGT and falling off thereafter. In contrast, beta-cell glucose sensitivity dropped in a monophasic, curvilinear fashion throughout the range of 2-h plasma glucose. Within the NGT range (2-h glucose of 4.1-7.7 mmol/liter), beta-cell glucose sensitivity declined by 50-70% (P < 0.02). Insulin sensitivity decreased sharply in the transition from lean to obese NGT and then declined further in IGT and mild T2DM to level off in the higher three quartiles of diabetic hyperglycemia. In T2DM, defective beta-cell potentiation and rate sensitivity also emerged (P </= 0.05). In the whole data set, insulin sensitivity and the dynamic parameters of beta-cell function explained 89% of the variability of 2-h plasma glucose levels. The following conclusions were reached: 1) beta-cell glucose sensitivity falls already within the NGT range in association with rising 2-h plasma glucose concentrations, although absolute insulin secretion rates increase; and 2) throughout the glucose tolerance range, dynamic parameters of beta-cell function (glucose sensitivity, rate sensitivity, and potentiation) and insulin sensitivity are independent determinants of 2-h plasma glucose levels.