Detailed metabolic studies were carried out to compare major regulatory steps in glucose metabolism in vivo between 25 normal pregnant Latino women without and 150 pregnant Latino women with gestational diabetes mellitus (GDM). The two groups were frequency-matched for age, BMI, and gestational age at testing in the third trimester. After an overnight fast, women with GDM had higher fasting plasma glucose (P = 0.0001) and immunoreactive insulin (P = 0.0003) concentrations and higher glucose production rates (P = 0.01) but lower glucose clearance rates (P = 0.001) compared with normal pregnant women. During steady-state hyperinsulinemia (approximately 600 pmol/l) and euglycemia (approximately 4.9 mmol/l), women with GDM had lower glucose clearance rates (P = 0.0001) but higher glucose production rates (P = 0.0001) and plasma free fatty acid (FFA) concentrations (P = 0.0002) than the normal women. These intergroup differences persisted when a subgroup of 116 women with GDM who were not diabetic < or = 6 months after pregnancy were used in the analysis. When all subjects were considered, there was a very close correlation between glucose production rates and plasma FFA concentrations throughout the glucose clamps in control (r = 0.996) and GDM (r = 0.995) groups. Slopes and intercepts of the relationships were nearly identical, suggesting that blunted suppression of FFA concentrations contributed to blunted suppression of glucose production in the GDM group. In addition to these defects in insulin action, women with GDM had a 67% impairment of pancreatic beta-cell compensation for insulin resistance compared with normal pregnant women. These results demonstrate that women with GDM have multiple defects in insulin action together with impaired compensation for insulin resistance. Our findings suggest that defects in the regulation of glucose clearance, glucose production, and plasma FFA concentrations, together with defects in pancreatic beta-cell function, precede the development of type 2 diabetes in these high-risk women.