Aims/hypothesis The glucagon gene (GCG) encodes several hormones important for energy metabolism: glucagon, oxyntomodulin and glucagon-like peptide (GLP)-1 and -2. Variants in GCG may associate with type 2 diabetes, obesity and/or related metabolic traits. Methods GCG was re-sequenced as a candidate gene in 865 European individuals. Twenty-nine variants were identified. Four variants that were considered to have a likelihood for altered functionality: rs4664447, rs7581952, Ile158Val and Trp169Ter, were genotyped in 17,584 Danes. Results When examined in 5,760 treatment-naive individuals, homozygous carriers of the low frequency (minor allele frequency 2.3%) G allele of rs4664447, predicted to disrupt an essential splice enhancer binding site, had lower levels of fasting plasma glucose (mean ± SD, 4.8 ± 1.2 vs 5.5 ± 0.8 mmol/l, p=0.004); fasting serum insulin (22±14 vs 42±27 pmol/l, p=0.04); glucose-stimulated serum insulin (159±83 vs 290±183 pmol/l, p=0.01) and adult height (165±10 vs 172±9 cm, p=0.0009) compared with A allele carriers. During oral glucose tolerance and hyperglycaemic arginine stimulation tests, the plasma AUC for GLP-1 (730±69 vs 1,334±288 pmol/l×min, p=0.0002) and basal and stimulated levels of serum insulin and plasma glucagon were ∼50% decreased (p<0.001) among three homozygous carriers compared with nine matched wild-type Electronic supplementary material The online version of this article (doi:10.1007/s00125-011-2265-7) contains peer-reviewed but unedited supplementary material, including a list of the GIANT Consortium members, which is available to authorised users.