Type 2 diabetes (T2D) is a disease of relative insulin deficiency resulting from both insulin resistance and beta cell failure. We have previously used heterogeneous stock (HS) rats to fine-map a locus for glucose tolerance. We show here that glucose intolerance in the founder strains of the HS colony is mediated by different mechanisms: insulin resistance in WKY and an insulin secretion defect in ACI, and we demonstrate a high degree of variability for measures of insulin resistance and insulin secretion in HS rats. As such, our goal was to use HS rats to fine-map several diabetes-related traits within a region on rat chromosome 1. We measured blood glucose and plasma insulin levels after a glucose tolerance test in 782 male HS rats. Using 97 SSLP markers, we genotyped a 68 Mb region on rat chromosome 1 previously implicated in glucose and insulin regulation. We used linkage disequilibrium mapping by mixed model regression with inferred descent to identify a region from 198.85 to 205.9 that contains one or more quantitative trait loci (QTL) for fasting insulin and a measure of insulin resistance, the quantitative insulin sensitivity check index. This region also encompasses loci identified for fasting glucose and Insulin_AUC (area under the curve). A separate <3 Mb QTL was identified for body weight. Using a novel penalized regression method we then estimated effects of alternative haplotype pairings under each locus. These studies highlight the utility of HS rats for fine-mapping genetic loci involved in the underlying causes of T2D.