BACKGROUND Islet transplantation results in impaired insulin secretion, but whether defects in insulin sensitivity contribute to impaired glucose disposal after islet transplantation under modern immunosuppression is not known. OBJECTIVE Our objective was to evaluate insulin sensitivity after islet transplantation performed under tacrolimus-based immunosuppression that used minimal steroids. METHODS This study was conducted at the University of Pennsylvania General Clinical Research Center. METHODS Eight islet transplant recipients, six type 1 diabetic (T1D), and 10 nondiabetic control subjects participated. METHODS We performed an insulin-modified frequently sampled iv glucose tolerance test to measure insulin sensitivity (S(I)), glucose effectiveness, and free fatty acid (FFA) dynamics. RESULTS S(I) was significantly greater in the islet transplant and control groups, compared with the T1D group (P < 0.05 for both comparisons). Glucose effectiveness was not significantly different across all three groups but was lower by trend in the T1D and islet transplant groups, compared with the control group (P = 0.07 overall ANOVA). FFA levels suppressed normally in the transplant recipients, but the timing and magnitude of FFA suppression were significantly impaired in the T1D group, compared with the islet transplant and control groups (P < 0.05 for all comparisons). The acute insulin response to glucose and the disposition index (D(I) = acute insulin response to glucose x S(I)) were significantly lower in the islet transplant group, compared with the control group (P < 0.05 for all comparisons). CONCLUSIONS These data suggest that even modest restoration of insulin secretion in islet transplant recipients may result in improved insulin sensitivity and FFA dynamics.