Diet induced obese (DIO) mice can be stratified according to their weight gain in response to high fat diet as low responders (LDR) and high responders (HDR). This allows the study of β-cell failure and the transitions to prediabetes (LDR) and early diabetes (HDR). C57BL/6N mice were fed for 8 weeks with a normal chow diet (ND) or a high fat diet and stratified as LDR and HDR. Freshly isolated islets from ND, LDR and HDR mice were studied ex-vivo for mitochondrial metabolism, AMPK activity and signalling, the expression and activity of key enzymes of energy metabolism, cholesterol synthesis, and mRNA profiling. Severely compromised glucose-induced insulin secretion in HDR islets, as compared to ND and LDR islets, was associated with suppressed AMP-kinase activity. HDR islets also showed reduced acetyl-CoA carboxylase activity and enhanced activity of 3-hydroxy-3-methylglutaryl-CoA reductase, which led respectively to elevated fatty acid oxidation and increased cholesterol biosynthesis. HDR islets also displayed mitochondrial membrane hyperpolarization and reduced ATP turnover in the presence of elevated glucose. Expression of protein kinase Cε, which reduces both lipolysis and production of signals for insulin secretion, was elevated in DIO islets. Genes whose expression increased or decreased by more than 1.2-fold were minor between LDR and ND islets (17 differentially expressed), but were prominent between HDR and ND islets (1508 differentially expressed). In HDR islets, particularly affected genes were related to cell cycle and proliferation, AMPK signaling, mitochondrial metabolism and cholesterol metabolism. In conclusion, chronically reduced AMPK activity, mitochondrial dysfunction, elevated cholesterol biosynthesis in islets, and substantial alterations in gene expression accompany β-cell failure in HDR islets. The β-cell compensation process in the prediabetic state (LDR) is largely independent of transcriptional adaptive changes, whereas the transition to early diabetes (HDR) is associated with major alterations in gene expression.