Short-term intensive insulin therapy (IIT) can improve pancreatic beta-cell function when administered early in the course of type 2 diabetes (T2DM). However, the degree of improvement in response to this therapy varies between patients. Thus, we sought to characterize the determinants of improvement in beta-cell function in response to short-term IIT in early T2DM. Sixty-three patients with mean 3.0±2.1 years duration of T2DM and HbA1c 6.8±0.8% underwent 4 weeks of IIT consisting of basal insulin detemir and pre-meal insulin aspart, with oral glucose tolerance test administered at baseline and 1-day post-IIT. Beta-cell function before and after IIT was assessed by Insulin Secretion-Sensitivity Index-2 (ISSI-2). Reversibility of beta-cell dysfunction was defined as percentage change in ISSI-2 ≥25%. Overall, the study population experienced an increase in ISSI-2 from baseline to post-IIT (P=0.01), with one third of participants achieving ≥25% improvement in ISSI-2. Compared to their peers, those with increase in ISSI-2 ≥25% had greater decrements in fasting glucose (P<0.0001), HbA1c (P=0.001), ALT (P=0.04), AST (P=0.02), and HOMA-IR (P<0.0001). On logistic regression analysis, baseline HbA1c (OR=2.83, 95%CI 1.16-6.88, P=0.02) and change in HOMA-IR (OR=0.008, 95%CI 0.0004-0.16, P=0.001) emerged as independent predictors of reversibility of beta-cell dysfunction. Indeed, reversibility of beta-cell dysfunction was achieved in only those participants in whom IIT yielded an improvement in HOMA-IR. In conclusion, decline in HOMA-IR may be a key determinant of improvement of beta-cell function in response to short-term IIT, suggesting a fundamental contribution of insulin resistance to the reversible component of beta-cell dysfunction in early T2DM.