The prevalence of childhood obesity and Type 2 Diabetes Mellitus (T2DM) has increased during recent decades. T2DM is accompanied with functional changes in the islets of Langerhans, which can be identified early in the pathogenesis. The aim of this thesis was to explore how metabolic changes caused by obesity early in life relate to islet function prior to overt T2DM. To address this, Uppsala Longitudinal Study of Childhood Obesity (ULSCO) was established (paper I). Initially, the association between palmitate and insulin secretion was investigated using a translational approach with obese and lean normoglycemic juveniles and isolated human islets (paper II). Secondly, dynamics of islet-hormones insulin and glucagon, and gut-hormones glucagon like-peptide 1 (GLP-1) and glicentin (paper III) and magnetic resonance imaging of pancreatic fat fraction (PFF) (paper IV) were studied in association to glucose tolerance and beta-cell function. Finally, a novel method of analysing shape features of oral glucose tolerance test (OGTT) curves was introduced and evaluated (paper V). Obese subjects had high prevalence of prediabetes and metabolic syndrome (MetS) (paper I). In obese pre-pubertal children with elevated palmitate levels, hyperinsulinemia was observed (paper II). In contrast, obese pubertal adolescents with similar palmitate levels showed moderate insulin levels during OGTT with delayed first phase insulin response. To explore mechanisms for these variations, isolated human islets were exposed to palmitate for different time periods in vitro. After 2 days accentuated insulin response was observed. Impaired beta-cell function and apoptosis were evident after 7 days, however. Hyperglucagonemia and disturbed GLP-1 and glicentin levels were associated with obesity and glycaemic status, with fasting glicentin being predictive of prediabetes (paper III). Furthermore, PFF was increased in obese subjects and associated to MetS and visceral adipose tissue, but not to beta-cell function (paper IV). OGTT curves were converted into geometric centres, centroids, which correlated with differences in glucose tolerance (paper V). In conclusion, the islet function in obese children was associated with elevated levels of palmitate, but not pancreatic fat. Fasting palmitate and glicentin levels, as well as centroid analyses of OGTT curves, could potentially identify obese children at risk of prediabetes and subsequent T2DM.