High concentrations of non-esterified fatty acids (NEFA) are a risk factor for the development of type 2 diabetes in Pima Indians. In vitro and in vivo chronic elevation of NEFA decreases glucose stimulated insulin secretion. We hypothesized that high fasting plasma NEFA increase the risk of type 2 diabetes by inducing a worsening of glucose-stimulated insulin secretion in Pima Indians. To test this hypothesis, fasting plasma NEFA concentrations, body composition (hydrodensitometry or DEXA), insulin action (M, hyperinsulinemic clamp), acute insulin response (AIR, 25-g ivGTT), glucose tolerance (75-g OGTT), were measured in 151 Pima Indians [107 normal glucose tolerant (NGT), (72M/35F, age 25±6 yr, body fat 31±9 %), 44 impaired glucose tolerant (IGT), (7M/37F, age 28±5 yr, body fat 37±8 %)] at the initial visit. These subjects were participants in ongoing studies of the pathogenesis of obesity and type 2 diabetes and had follow-up measurements of body composition, glucose tolerance, M and AIR. In individuals with NGT, cross-sectionally high fasting plasma NEFA concentrations at the initial visit were negatively associated with AIR after adjustment for age, sex, percent body fat and M (p=0.03). Longitudinally, high fasting plasma NEFA concentrations at the initial visit were not associated with change in AIR. In individuals with IGT, cross-sectionally high fasting plasma NEFA concentrations at the initial visit were not associated with AIR. Longitudinally, high fasting plasma NEFA concentrations at the initial visit were associated with a decrease in AIR before (p<0.0001) and after adjustment for sex, age at follow-up, time of follow-up, change in percent body fat, change in insulin sensitivity and AIR at the initial visit (p=0.0006). In conclusion, findings in people with normal glucose tolerance indicate that fasting plasma NEFA concentrations are not a primary etiologic factor for beta cell failure. However, in subjects who have progressed to a state of impaired glucose tolerance chronically elevated NEFA seem to have a deleterious effect on insulin secretory capacity.