The reduction of functional β cell mass is a key feature of type 2 diabetes. Here, we studied metabolic functions and islet gene expression profiles of C57BL/6J mice with naturally occurring nicotinamide nucleotide transhydrogenase (NNT) deletion mutation, a widely used model of diet-induced obesity and diabetes. On high fat diet (HF), the mice developed obesity and hyperinsulinemia, while blood glucose levels were only mildly elevated indicating a substantial capacity to compensate for insulin resistance. The basal serum insulin levels were elevated in HF mice, but insulin secretion in response to glucose load was significantly blunted. Hyperinsulinemia in HF fed mice was associated with an increase in islet mass and size along with higher BrdU incorporation to β cells. The temporal profiles of glucose-stimulated insulin secretion (GSIS) of isolated islets were comparable in HF and normal chow fed mice. Islets isolated from HF fed mice had elevated basal oxygen consumption per islet but failed to increase oxygen consumption further in response to glucose or carbonyl cyanide-4-trifluoromethoxyphenylhydrazone (FCCP). To obtain an unbiased assessment of metabolic pathways in islets, we performed microarray analysis comparing gene expression in islets from HF to normal chow-fed mice. A few genes, for example, those genes involved in the protection against oxidative stress (hypoxia upregulated protein 1) and Pgc1α were up-regulated in HF islets. In contrast, several genes in extracellular matrix and other pathways were suppressed in HF islets. These results indicate that islets from C57BL/6J mice with NNT deletion mutation develop structural, metabolic and gene expression features consistent with compensation and decompensation in response to HF diet.