Second-generation antipsychotics (SGAs) are commonly prescribed to youth but are associated with metabolic effects including obesity and diabetes. The mechanisms underlying diabetes development are unclear. The purpose of this study was to compare glucose homeostasis, insulin sensitivity, insulin secretion, and overall β-cell function in risperidone-treated, quetiapine-treated, and SGA-naive youth with mental illness. We conducted a cross-sectional study in which youth aged 9 to 18 years underwent a 2-hour oral glucose tolerance test. Indices for insulin sensitivity (Matsuda index), insulin secretion (insulinogenic index), and β-cell function (insulin secretion-sensitivity index-2 [ISSI-2]) were calculated. A total of 18 SGA-naive, 20 risperidone-treated, and 16 quetiapine-treated youth participated. The 3 groups were similar in age, sex, ethnicity, body mass index standardized for age and sex, pubertal status, degree of psychiatric illness, psychiatric diagnoses, and other medications. The median treatment duration was 17 months (range, 3-91 months) for risperidone-treated youth and 10 months (range, 3-44 months) for quetiapine-treated youth. The quetiapine-treated group had lower insulinogenic index (P < 0.01) and lower ISSI-2 (P < 0.01) compared with that in the SGA-naive group. Only the body mass index standardized for age and sex was negatively associated with Matsuda index (β = -0.540, P < 0.001) in all youth. Quetiapine treatment was negatively associated with insulinogenic index (β = -0.426, P = 0.007) and ISSI-2 (β = -0.433, P = 0.008). Quetiapine reduced the insulin expression in isolated mouse islets suggesting a direct β-cell effect. Our results suggest that quetiapine treatment in youth is associated with impaired β-cell function, specifically lower insulin secretion. Prospective longitudinal studies are required to understand the progression of β-cell dysfunction after quetiapine initiation.