Prepubertal African American (AA) youth compared with their Caucasian (C) peers have higher insulin secretion, which correlates positively with free fatty acid (FFA) concentration. In our continued efforts to explain the racial disparity in insulinemia, and because FFAs modulate insulin secretion, we hypothesized that AA youth would have a greater response to FFA-induced β-cell insulin secretion than C youth. We compared the short-term effects of FFA elevation on fasting and glucose-stimulated C-peptide–modeled insulin secretion in prepubertal normal-weight AA versus C peers during a 2-h hyperglycemic clamp (12.5 mmol/L) on two occasions: 1) infusion of normal saline and 2) infusion of 20% intralipid (IL). During IL infusion, insulin sensitivity (IS) declined comparably in AA and C youth. Glucose sensitivity of first- and second-phase insulin secretion showed a significant condition × race interaction being higher in AA youth. Disposition index, β-cell function relative to IS, declined with IL infusion in AA and C youth, with a significantly greater decrease in Cs compared with AAs. In conclusion, AA and C prepubertal youth both demonstrated a decline in β-cell function relative to IS during IL infusion, indicative of acute lipotoxicity. The greater decline in C youth compared with AAs may suggest that C youth are more susceptible to β-cell lipotoxicity than AA youth, or alternatively, that AA youth are hypersensitive to FFA stimulation of β-cell insulin secretion, consistent with our theory.