OBJECTIVE Ethnic differences in type 2 diabetes risk between South Asians and white Europeans originate before adult life and are not fully explained by higher adiposity levels in South Asians. Although metabolic sensitivity to adiposity may differ between ethnic groups, this has been little studied in childhood. We have therefore examined the associations among adiposity, insulin resistance, and glycemia markers in children of different ethnic origins. RESEARCH DESIGN AND METHODS Cross-sectional study of 4,633 9- to 10-year-old children (response rate 68%) predominantly of South Asian, black African-Caribbean, and white European origin (n = 1,266, 1,176, and 1,109, respectively) who had homeostasis model assessments of insulin resistance (HOMA-IR), glycemia markers (HbA1c and fasting glucose), and adiposity (BMI, waist circumference, skinfold thicknesses, and bioimpedance [fat mass]). RESULTS All adiposity measures were positively associated with HOMA-IR in all ethnic groups, but associations were stronger among South Asians compared to black African-Caribbeans and white Europeans. For a 1-SD increase in fat mass percentage, percentage differences in HOMA-IR were 37.5% (95% CI 33.3–41.7), 29.7% (25.8–33.8), and 27.0% (22.9–31.2), respectively (P interaction < 0.001). All adiposity markers were positively associated with HbA1c in South Asians and black African-Caribbeans but not in white Europeans; for a 1-SD increase in fat mass percentage, percentage differences in HbA1c were 0.04% (95% CI 0.03–0.06), 0.04% (0.02–0.05), and 0.02% (−0.00 to 0.04), respectively (P interaction < 0.001). Patterns for fasting glucose were less consistent. CONCLUSIONS South Asian children are more metabolically sensitive to adiposity. Early prevention or treatment of childhood obesity may be critical for type 2 diabetes prevention, especially in South Asians.