The purpose of this study was to compare the impact of treating insulin resistance with a thiazolidinedione drug before vs. at the onset of diabetes on glucose levels and beta-cell function. Nondiabetic Hispanic women of Mexican or Central American descent with prior gestational diabetes mellitus (GDM) were randomized to troglitazone (early intervention), 400 mg/d, or placebo (later intervention). Women who developed diabetes were placed on open-label troglitazone. Glucose tolerance, insulin resistance, and beta-cell function were measured at randomization, at the diagnosis of diabetes, and 8 months post trial to determine the long-term impact of the two treatment strategies on glucose levels and beta-cell function. During a mean follow-up of 4.3 yr between baseline and posttrial tests, glucose tolerance (oral glucose tolerance test glucose area, P = 0.04) and insulin resistance (MINMOD SI, P = 0.02) worsened more in women randomized to late intervention (n = 69) than to early intervention (n = 57). Insulin secretion (acute insulin response in the iv glucose tolerance test, P = 0.09) and beta-cell compensation for insulin resistance (disposition index, P = 0.07) also tended to worsen more in the late intervention group. Among women in the late intervention group who developed diabetes, oral glucose tolerance test glucose area (P = 0.0001) and beta-cell function (P < or = 0.04) deteriorated significantly during development of diabetes on placebo and then did not change significantly (P > 0.50) during treatment with troglitazone and posttreatment washout. In high-risk Hispanic women, amelioration of insulin resistance can stabilize glycemia at the time diabetes develops. These findings highlight the role of insulin resistance in the genesis of progressive beta-cell dysfunction during the evolution of type 2 diabetes.