Type 2 diabetes (T2D) is progressive, often requiring additional medications to maintain glycemic control. We assessed baseline β-cell function and insulin sensitivity as predictors of worsening glycemia (HbA1c) in the GRADE Study. Adults with T2D <y and HbA1c 6.8-8.5% were randomized to glimepiride, sitagliptin, insulin glargine 100 U/mL or liraglutide added to metformin monotherapy. Complete baseline OGTT data were available for 4586 of 5047 participants (Mean±SD: Age 57±y, 64% male, 5.0±1.3 y f/up) . Insulin sensitivity (HOMA2S) and early (C-peptide index (CPI) : ΔCP/ΔG 0-30 min) and total (incAUC-CP/G 0-120 min) C-peptide responses were used in Cox proportional hazard models to predict time to 1° (HbA1c ≥7%) and 2° (HbA1c >7.5%) glycemic outcomes and tested for treatment interaction. Given the inverse relationship with insulin sensitivity, C-peptide responses were adjusted for HOMA2S. Values determined at baseline (mean±SD) were: CPI 0.8±.nmol/g, incAUC CP/G 1.0±0.6 nmol/mg, HOMA2S 35±68 %, fasting glucose 152±31 mg/dl. Higher C-peptide responses predicted lower risk of 1° (CPI: HR±SE per 1 unit change =0.74±0.03, p<0.001; incAUC-CP/G: HR=0.68±0.02, p<0.001) and 2° glycemic outcomes (CPI: HR=0.71±0.03, p<0.001; incAUC-CP/G: HR=0.60±0.03, p<0.001) . Risks did not differ by treatment. There was interaction for HOMA2S and treatment; a 5 unit change in HOMA2S predicted lower risk of 1° and 2° outcomes with glimepiride and sitagliptin (HR=0.97±0.for both 1° outcomes; HR=0.96±0.for 2° outcome with glimepiride, HR=0.95±0.for 2° outcome with sitagliptin; all p<0.05) . A mg/dL change in fasting glucose predicted greater risk of 1° outcomes for all treatments, lowest for insulin glargine (HR=1.05±0.01) and highest for sitagliptin (HR=1.11±0.01) . Conclusions: Impaired β-cell function based on an OGTT predicted higher risk of T2D progression regardless of assigned treatment. This approach may identify cases that may benefit from earlier more aggressive therapy. Disclosure K.Utzschneider: Consultant; Nevro Corp. T.A.Elasy: None. W.Valencia: None. C.Ma: None. N.Rasouli: Advisory Panel; Eli Lilly and Company, Novo Nordisk, Sanofi, Research Support; Allergan, Eli Lilly and Company, Novo Nordisk. S.E.Kahn: Advisory Panel; Bayer AG, Boehringer Ingelheim International GmbH, Eli Lilly and Company, Intarcia Therapeutics, Inc., Merck & Co., Inc., Novo Nordisk, Pfizer Inc. W.Sivitz: n/a. Grade research group: n/a. N.Younes: None. N.M.Butera: None. A.Balasubramanyam: None. C.Desouza: Advisory Panel; AstraZeneca, Bayer AG, Novo Nordisk A/S, Consultant; Asahi Kasei Corporation. J.Krakoff: None. J.I.Barzilay: None. R.A.Defronzo: Advisory Panel; AstraZeneca, Boehringer Ingelheim International GmbH, Intarcia Therapeutics, Inc., Novo Nordisk, Research Support; AstraZeneca, Boehringer Ingelheim International GmbH, Merck & Co., Inc., Speaker’s Bureau; AstraZeneca. R.M.Bergenstal: Advisory Panel; Hygieia, Medtronic, Roche Diabetes Care, Zealand Pharma A/S, Consultant; Abbott Diabetes, Ascensia Diabetes Care, Bigfoot Biomedical, Inc., CeQur SA, Dexcom, Inc., Eli Lilly and Company, Novo Nordisk, Onduo LLC, Sanofi, United HealthCare Services, Inc., Research Support; Abbott Diabetes, Dexcom, Inc., Eli Lilly and Company, Insulet Corporation, Medtronic, Novo Nordisk, Sanofi. Funding National Institute of Diabetes and Digestive and Kidney Diseases (U01DK098246, U34-DK-088043)