Nonlinear interactions between obesity and genetic risk factors are thought to determine susceptibility to type 2 diabetes. We used genetic obesity as a tool to uncover latent differences in diabetes susceptibility between two mouse strains, C57BL/6J (B6) and BTBR. Although both BTBR and B6 lean mice are euglycemic and glucose tolerant, lean BTBR x B6 F1 male mice are profoundly insulin resistant. We hypothesized that the genetic determinants of the insulin resistance syndrome might also predispose genetically obese mice to severe diabetes. Introgressing the ob allele into BTBR revealed large differences in diabetes susceptibility between the strain backgrounds. In a population of F2-ob/ob mice segregating for BTBR and B6 alleles, we observed large variation in pancreatic compensation for the underlying insulin resistance. We also detected two loci that substantially modify diabetes severity, and a third locus that strongly links to fasting plasma insulin levels. Amplification of the genetic signal from these latent diabetes susceptibility alleles in F2-ob/ob mice permitted discovery of an interaction between the two loci that substantially increased the risk of severe type 2 diabetes.