We determined in vivo and in vitro pancreatic islet insulin secretion and glucose metabolism in fetuses with intrauterine growth restriction (IUGR) caused by chronic placental insufficiency to identify functional deficits in the fetal pancreas that might be caused by nutrient restriction. Plasma insulin concentrations in the IUGR fetuses were 69% lower at baseline and 76% lower after glucose-stimulated insulin secretion (GSIS). Similar deficits were observed with arginine-stimulated insulin secretion. Fetal islets, immunopositive for insulin and glucagon, secreted insulin in response to increasing glucose and KCl concentrations. Insulin release as a fraction of total insulin content was greater in glucose-stimulated IUGR islets, but the mass of insulin released per IUGR islet was lower because of their 82% lower insulin content. A deficiency in islet glucose metabolism was found in the rate of islet glucose oxidation at maximal stimulatory glucose concentrations (11 mmol/liter). Thus, pancreatic islets from nutritionally deprived IUGR fetuses caused by chronic placental insufficiency have impaired insulin secretion caused by reduced glucose-stimulated glucose oxidation rates, insulin biosynthesis, and insulin content. This impaired GSIS occurs despite an increased fractional rate of insulin release that results from a greater proportion of releasable insulin as a result of lower insulin stores. Because this animal model recapitulates the human pathology of chronic placental insufficiency and IUGR, the beta-cell GSIS dysfunction in this model might indicate mechanisms that are developmentally adaptive for fetal survival but in later life might predispose offspring to adult-onset diabetes that has been previously associated with IUGR.