Type 2 diabetes in Asia occurs largely in the absence of obesity. The metabolically-obese normal-weight (MONW) phenotype refers to lean subjects with metabolic dysfunction that is typically observed in people with obesity, and is associated with increased risk for diabetes. Previous studies evaluated MONW subjects who had greater BMI or total body fat than respective control groups, making interpretation of the results difficult. We evaluated insulin sensitivity (hyperinsulinemic-euglycemic clamp), insulin secretion (mixed meal with oral minimal modeling), intra-abdominal, muscle, and liver fat contents (magnetic resonance), and fasting and postprandial glucose and insulin concentrations in 18 MONW subjects and 18 metabolically-healthy controls matched for age (43{plus minus}3 and 40{plus minus}3 y; P=0.52), BMI (both 22{plus minus}1 kg/m2; P=0.69), total body fat (17{plus minus}1 and 16{plus minus}1 kg; P=0.33), and sex (9 men and 9 women in each group). Compared with controls, MONW subjects had ~2-fold greater visceral adipose tissue volume and ~4-fold greater intrahepatic fat content (but similar muscle fat), 20%-30% lower glucose disposal rates and insulin sensitivity, and 30%-40% greater insulin secretion rates (all P<0.05). The disposition index, fasting glucose and HbA1c concentrations were not different between groups, whereas postprandial glucose and insulin concentrations were ~15% and ~65% greater, respectively, in MONW than control subjects (both P<0.05). We conclude that the MONW phenotype is associated with accumulation of fat in the intra-abdominal area and the liver, profound insulin resistance, but also a robust β-cell insulin secretion response which compensates for insulin resistance and helps maintain glucose homeostasis.