Islet function was examined in 13 severely obese women [body mass index 46.4 ± 5.5 (SD) kg/m²] before and after standardized 15 and 25% weight reduction (WR) instituted by bariatric surgery. The insulin response to arginine at fasting (AIR₁), at 14 mmol/l, and at >25 mmol/l glucose was reduced by 37–50% after 15 and 25% WR (P ≤ 0.05). Insulin sensitivity was determined as the amount of glucose infused to reach 14 mmol/l divided by the insulin level (M/I), a measure showing a linear correlation with insulin sensitivity during euglycemic hyperinsulinemic clamps (r = 0.74, P < 0.001) and a hyperbolic relation to AIR₁ (r = −0.63,P < 0.001) in 169 healthy subjects. M/I was increased by 318 ± 182% after 15% (P = 0.004) and by 489 ± 276% after 25% WR (P = 0.007). The reduction in insulin secretion was not as large as anticipated from the increased insulin sensitivity, which resulted in an increased disposition index (DI; AIR₁ × M/I). Thus DI increased by 95 ± 24% after 15% (P = 0.018) and by 176 ± 35% after 25% WR (P = 0.011). This improved β-cell function correlated independently with reduced glucose, triglycerides, and leptin and increased adiponectin levels and was associated with a reduced proinsulin-to-insulin ratio. In contrast, glucagon secretion was not significantly affected by WR. We conclude that WR results in improved β-cell function when related to insulin sensitivity.