Elevated serum gamma-glutamyltransferase (GGT) concentrations have been related to features of the metabolic syndrome as well as increased risk of cardiovascular and liver disease. More recently, elevated GGT levels were shown to predict development of type 2 diabetes in a longitudinal study from Korea. The aim of the present study was to test the hypothesis that serum GGT is associated with glucose tolerance, insulin sensitivity and beta-cell function in a healthy, non-diabetic Caucasian population from the Tübingen family study. Insulin sensitivity was estimated by oGTT (n = 850) or measured by hyperinsulinemic euglycemic clamp (n = 245), respectively. A subgroup (n = 70) underwent additional determination of intrahepatic lipid content using 1H magnetic resonance spectroscopy. Serum GGT was positively correlated with two-hour glucose during oGTT (r = 0.15, p < 0.0001) and negatively correlated with insulin sensitivity from oGTT (r = -0.31, p < 0.0001) and clamp (r = -0.27, p < 0.0001). The relationship between GGT and insulin sensitivity remained significant after adjusting for sex, age, BMI, and AST using multivariate regression analysis. Inclusion of serum triglyceride levels as a parameter of lipid metabolism kept the relationship significant in the oGTT group (p < 0.0001), but not in the smaller clamp group (p = 0.11). Additionally, serum GGT was positively correlated with hepatic lipid content (r = 0.49, p < 0.001) independent of sex, age, BMI, AST or serum triglycerides. There was no significant correlation between GGT and the index for beta-cell function after adjusting for age, sex, BMI and insulin sensitivity (p = 0.74). In conclusion, elevated serum GGT levels predict glucose intolerance probably via insulin resistance rather than beta-cell dysfunction. This may be primarily related to hepatic insulin resistance and increased intrahepatic lipids. The association observed between elevated hepatic lipids and reduced insulin sensitivity might explain the increased diabetes risk observed in subjects with elevated serum GGT concentrations. In the absence of overt liver disease, elevated serum GGT concentrations may point the clinician to incipient disturbances in the glucose metabolism.