The objective of this application is to evaluate the effects of RYGB surgery on glycemic control and underlying mechanisms that contribute to T2DM in obese subjects (BMI: 30-40 kg/m2). Our central hypothesis is that RYGB surgery will reduce hyperglycemia via reversal of beta-cell dysfunction and decrease hepatic and peripheral insulin resistance. The approach requires a 12-month randomized controlled trial. The rationale is based on data showing that RYGB lowers fasting and postprandial glucose, and increases the GLP-1 response to a meal. However, the therapeutic efficacy of RYGB surgery in obesity-related T2DM needs to be demonstrated in a randomized trial.