Transglutaminase 2 (TG2) is an enzyme with diverse biological functions. TG2 catalyzes transamidation reactions, has intrinsic kinase activity, and acts as a G-protein in intracellular signaling. TG2 (Tgm2)-null mice are glucose intolerant and have impaired glucose-stimulated insulin secretion (GSIS). Furthermore, three naturally occurring missense mutations in the human TGM2 gene, corresponding to amino acid substitutions of Met330Arg, Ile331Asn, and Asn333Ser in the TG2 protein, have been reported and found to be associated with early-onset type 2 diabetes. However, their effect on TG2 function is not fully understood. To determine this, we have reproduced naturally occurring mutations in TG2 using site-directed mutagenesis. Overexpression of Myc-TG2 mutants in INS-1E cells resulted in a reduction of GSIS in comparison with cells overexpressing wild-type Myc-TG2 (WT-TG2). The maximum reduction was found in cells overexpressing Ile331Asn-TG2 (32%) followed by Met330Arg-TG2 (20%), and the least in Asn333Ser-TG2 (7%). Enzymatic analysis revealed that TG2 mutants have impaired transamidation and kinase activities in comparison with WT-TG2. GTP-binding assays showed that TG2 mutants also have altered GTP-binding ability, which is found to be modulated in response to glucose stimulation. Collectively, these data suggest that naturally occurring mutations in TG2 affect transamidation, kinase, and GTP-binding functions of TG2. While reduced insulin secretion, as a result of naturally occurring mutations in TG2, is due to the impairment of more than one biological function of TG2, it is the transamidation function that appears to be impaired during the first phase, whereas the GTP-binding function affects the second phase of insulin secretion.