We have demonstrated high heritability of insulin secretion measured as acute insulin response to glucose times insulin sensitivity (disposition index). Furthermore, we showed that obese normoglycemic family members of a type 2 diabetic proband failed to compensate for the insulin resistance of obesity by increasing insulin secretion. In this study, we tested the primary hypotheses that previously described variants in the pancreatic sulfonylurea receptor gene (SUR1 or ABCC8), glucokinase (GCK) gene, or hepatocyte nuclear factor 1alpha (TCF1 or HNF1alpha) gene contribute to the inherited deficiencies of insulin secretion and beta-cell compensation to insulin resistance, as well as the secondary hypotheses that these variants altered insulin sensitivity. We typed 124 nondiabetic members of 26 familial type 2 diabetic kindreds who had undergone tolbutamide-modified intravenous glucose tolerance tests for two variants of the ABCC8 (sulfonylurea) gene, two variants of the GCK gene, and one common amino acid variant in the TCF1 (HNF1alpha) gene. All family members were classified as normal or having impaired glucose tolerance based on oral glucose tolerance testing. We used minimal model analysis to calculate the insulin sensitivity index (S1) and glucose effectiveness (SG), and acute insulin response to glucose was calculated as the mean insulin excursion above baseline during the first 10 min after the glucose bolus. Disposition index (DI), a measure of beta-cell compensation for insulin sensitivity, was calculated as insulin sensitivity times acute insulin response. Effects of polymorphisms were determined using mixed effects models that incorporated family membership and by a likelihood analysis that accounted for family structure through polygenic inheritance. An intronic variant of the ABCC8 gene just upstream of exon 16 was a significant determinant of both DI and an analogous index based on acute insulin response to tolbutamide. Surprisingly, heterozygous individuals showed the lowest indexes, whereas the DI in the two homozygous states did not differ significantly. Neither the exon 18 variant nor the variants in the GCK and TCF1 genes were significant in this model. However, combined genotypes of ABCC8 exon 16 and 18 variants again significantly predicted both indexes of glucose and tolbutamide-stimulated insulin secretion. Unexpectedly, a variant in the 3' untranslated region of the GCK gene interacted significantly with BMI to predict insulin sensitivity. The exon 16 variant of the ABCC8 gene reduced beta-cell compensation to the decreased insulin sensitivity in the heterozygous state. This may explain the observation from several groups of an association of the ABCC8 variants in diabetes and is consistent with other studies showing a role of ABCC8 variants in pancreatic beta-cell function. However, our study focused on individuals from relatively few families. Ascertainment bias, family structure, and other interacting genes might have influenced our unexpected result. Additional studies are needed to replicate our observed deficit in beta-cell compensation in individuals heterozygous for ABCC8 variants. Likewise, the role of the GCK 3' variant in the reduced insulin sensitivity of obesity will require further study.