Altered glucose metabolism in obese youth is associated with defects in insulin sensitivity and insulin secretion. Peripheral insulin resistance in obese youth is an early phenomenon, strongly associated with a pattern of lipid partitioning characterized by increased deposition of lipid in the visceral and intramyocellular compartments. This metabolic phenotype is further characterized by a relatively reduced adiponectin level and elevation of inflammatory cytokines. A reduced sensitivity of the beta cell for first phase insulin secretion results in impaired glucose tolerance, while reduced first and second phase beta cell sensitivity for insulin secretion results in overt type 2 diabetes. Altered glucose metabolism in obese youth represents an element of the "insulin resistance syndrome", comprising obesity, dyslipidemia and hypertension. The dynamics of glucose tolerance status in these youngsters seems to be more rapid than in adults, thus representing a narrow window of opportunity for successful intervention to prevent diabetes.