OBJECTIVE: To compare the effects of insulin sensitivity and β-cell function over time on HbA1c and durability of glycemic control in response to dual therapy. RESEARCH DESIGN AND METHODS: GRADE participants were randomized to glimepiride (n = 1,254), liraglutide (n = 1,262), or sitagliptin (n = 1,268) added to baseline metformin and followed for mean ± SD 5.0 ± 1.3 years, with HbA1c assessed quarterly and oral glucose tolerance tests at baseline, 1, 3, and 5 years. We related time-varying insulin sensitivity (HOMA 2 of insulin sensitivity [HOMA2-%S]) and early (0-30 min) and total (0-120 min) C-peptide (CP) responses to changes in HbA1c and glycemic failure (primary outcome HbA1c ≥ 7% [53 mmol/mol] and secondary outcome HbA1c >7.5% [58 mmol/mol]) and examined differential treatment responses. RESULTS: Higher HOMA2-%S was associated with greater initial HbA1c lowering (3 months) but not subsequent HbA1c rise. Greater CP responses were associated with a greater initial treatment response and slower subsequent HbA1c rise. Higher HOMA2-%S and CP responses were each associated with lower risk of primary and secondary outcomes. These associations differed by treatment. In the sitagliptin group, HOMA2-%S and CP responses had greater impact on initial HbA1c reduction (test of heterogeneity, P = 0.009 HOMA2-%S, P = 0.018 early CP, P = 0.001 total CP) and risk of primary outcome (P = 0.005 HOMA2-%S, P = 0.11 early CP, P = 0.025 total CP) but lesser impact on HbA1c rise (P = 0.175 HOMA2-%S, P = 0.006 early CP, P < 0.001 total CP) in comparisons with the glimepiride and liraglutide groups. There were no differential treatment effects on secondary outcome. CONCLUSIONS: Insulin sensitivity and β-cell function affected treatment outcomes irrespective of drug assignment, with greater impact in the sitagliptin group on initial (short-term) HbA1c response in comparison with the glimepiride and liraglutide groups.