We sought to determine whether obese adolescents with high-“normal” 2-h post-oral glucose tolerance test glucose levels display defects in insulin secretion and sensitivity associated with future development of impaired glucose tolerance (IGT). Insulin sensitivity was measured by hyperinsulinemic-euglycemic clamp and insulin secretion by applying mathematical modeling during the hyperglycemic clamp in 60 normal glucose tolerance (NGT) obese adolescents, divided into three groups based on the 2-h glucose values (<100, 100–119, 120–139 mg/dL), and in 21 IGT obese adolescents. Glucose tolerance was reevaluated after 2 years. Insulin sensitivity decreased significantly across 2-h glucose NGT categories, while the highest NGT category and IGT group were similar. First-phase insulin secretion decreased across NGT categories, while no difference was found between the highest NGT group and IGT subjects. Second-phase secretion was similar across all NGT and IGT groups. The disposition index (CDI) decreased across NGT categories, while no difference was observed between the highest NGT and IGT subjects. Age and CDI were the best predictors of 2-h glucose after two years. Across rising categories of normal 2-h glucose levels, NGT obese adolescents exhibit significant impairment of β-cell function relative to insulin sensitivity associated with the development of IGT.