Background: Gestational diabetes mellitus (GDM) is a pregnancy complication characterized by second trimester hyperglycemia. Untreated, GDM is related to an increased risk for adverse pregnancy outcomes. Both beta cell dysfunction and insulin resistance underlie impaired glucose tolerance. Understanding the dominant mechanism predisposing to GDM may be important to provide effective treatment in order to improve perinatal outcomes. We hypothesize that insulin resistance rather that beta cell dysfunction predisposes to GDM. Methods: A 75g oral glucose tolerance test (OGTT) was performed on 2112 second-trimester pregnant women to determine the relationship between insulin resistance (HOMA-IR), beta cell function (HOMA-β), and the prevalence of abnormal glucose handling. Results: High insulin resistance raised the risk of GDM (relative risk (RR) 6.1, 95% confidence interval (CI) (4.4–8.5)), as did beta cell dysfunction (RR 3.8, 95% CI (2.7–5.4)). High insulin resistance, but not beta cell function, enhances the necessity for additional glucose lowering medication on top of a low carbohydrate diet in women diagnosed with GDM. Conclusions: Both high insulin resistance and beta cell dysfunction increase the risk of GDM. As increased insulin resistance, rather than beta cell function, is related to an insufficient response to a low carbohydrate diet, we speculate that insulin sensitizers rather than insulin therapy may be the most targeted therapeutic modality in diet-insensitive GDM.