Aims/hypothesis Diabetes frequently develops in patients with pancreatic disorders. We aimed to determine the lower threshold of beta cell area for diabetes manifestation as well as the impact of insulin sensitivity on glucose homoeostasis in patients with pancreatic diabetes. Methods Eighty-two patients undergoing pancreatic surgery underwent pre-operative oral glucose challenge. Fractional pancreatic beta cell area was determined, and indices of insulin sensitivity and beta cell function were calculated. Results HbA 1c and glucose levels were similar in patients with high and intermediate beta cell area, but were significantly higher in those with the lowest beta cell area (p< 0.0001). Insulin secretion was reduced only in patients with the lowest beta cell area (p<0.001). The relative beta cell deficits at the onset of diabetes and impaired glucose tolerance were 64% and 21%, respectively, based on 2 h glucose levels. Deteriorating insulin sensitivity was associated with a small increase in the incidence of diabetes. Conclusions/interpretation In conclusion, pancreatic diabetes probably develops after a reduction in beta cell area of 65%. Post-challenge glucose excursions are much more closely related to pancreatic beta cell area than to fasting