Seventy-nine children, aged two and one-half to thirteen years, divided into four groups on the basis of their weight and family history of diabetes mellitus (one sibling or one parent with insulin dependent diabetes), were examined. The data showed that the occurrence of chemical diabetes was higher in children with family history of diabetes. In obese children hyperinsulinism was present, but glucose intolerance was associated with impairment of insulin secretion. The findings suggest that there probably is a genetically predisposed incapacity of beta cells to respond to various stimuli, and diabetes may develop in the face of relative insulin deficiency, regardless of the, absolute value of plasma insulin.