OBJECTIVE - Genome-wide association studies have identified several variants within the MTNR1B locus that are associated with fasting plasma glucose (FPG) and type 2 diabetes. We refined the association signal by direct genotyping and examined for associations of the variant displaying the most independent effect on FPG with isolated impaired fasting glycemia (i-IFG), isolated impaired glucose tolerance (i-IGT), type 2 diabetes, and measures of insulin release and peripheral and hepatic insulin sensitivity. RESEARCH DESIGN AND METHODS - We examined European-descent participants in the Inter99 study (n = 5,553), in a sample of young healthy Danes (n = 372), in Danish twins (n = 77 elderly and n = 97 young), in additional Danish type 2 diabetic patients (n = 1,626) and control subjects (n = 505), in the Data from the Epidemiological Study on the Insulin Resistance Syndrome (DESIR) study (n = 4,656), in the North Finland Birth Cohort 86 (n = 5,258), and in the Haguenau study (n = 1,461). RESULTS - The MTNR1B intronic variant, rs10830963, carried most of the effect on FPG and showed the strongest association with FPG (combined P = 5.3 × 10-31) and type 2 diabetes. The rs10830963 G-allele increased the risk of i-IFG (odds ratio [OR] 1.64, P = 5.5 × 10-11) but not i-IGT. The G-allele was associated with a decreased insulin release after oral and intravenous glucose challenges (P < 0.01) but not after injection of tolbutamide. In elderly twins, the G-allele associated with hepatic insulin resistance (P = 0.017). CONCLUSIONS - The G-allele of MTNR1B rs10830963 increases risk of type 2 diabetes through a state of i-IFG and not through i-IGT. The same allele associates with estimates of β-cell dysfunction and hepatic insulin resistance.