Insulin resistance and impaired insulin secretion are hallmark features associated with fasting hyperglycemia and impaired glucose tolerance in Type 2 diabetes. Although both abnormalities are linked, it is thought that most individuals develop insulin resistance long before beta-cell dysfunction occurs. However, the mechanisms underlying progressive beta-cell dysfunction in the presence of insulin resistance remain unclear. We have previously published that an impairment in glucose-mediated insulin secretion develops in 12 week-old obese and glucose intolerant PEPCK (Phosphoenolpyruvate carboxykinase) transgenic rats which have a primary defect causing hepatic insulin resistance. Furthermore, tolbutamide-induced insulin secretion was also impaired in PEPCK rats suggesting that this defect may lie at the level of the K+ATP channel. The aims of this study were to (i) confirm the impairment in insulin secretion ex vivo; (ii) determine whether this secretory defect was secondary to obesity; and (iii) determine the expression levels of the components of the K+ATP channel in islets. Our results show that (i) compared to control, PEPCK islets had similar insulin secretion at 2.8mM glucose (1.9 ± 0.5 vs. 1.6 ± 0.3 % content, n = 7-8) but impaired secretion at 20mM glucose (2.9 ± 0.5 vs. 7.0 ± 1.8, p = 0.05, n = 7); (ii) pair-feeding PEPCK rats to the lean control resulted in matched body weights, but did not rescue glucose-mediated insulin secretion (240 ± 39 vs. 378 ± 26 total AUC x 45 min, p = 0.04, n = 4-6); and (iii) Real-time PCR analysis of islet mRNA showed reduced levels of Abbc8 (0.3 ± 0.06 vs. 1.0 ± 0.2, p = 0.01, n = 7-9) and Kcnj11 (0.2 ± 0.06 vs.1.0 ± 0.3, p = 0.04, n = 8-9). We conclude that the impaired insulin secretion in the PEPCK rat is not associated with obesity, but rather, may be caused by glucose toxicity associated with a reduction of the components of the K+ATP channel.