Aims Aboriginal peoples have a high prevalence of smoking and are at major risk for diabetes. The role of insulin resistance vs. compromised P-cell function in the link between smoking and glycaemic disease is not clear. This study tested whether relations between insulin resistance and P-cell function differ between current smokers, former smokers and non-smokers, and if having diabetes modifies smoking-related effects. Methods A community-based diabetes screening initiative was mounted for a North-western First Nation (Interior Salishan) in rural British Columbia, Canada. Respondents were on-reserve Aboriginal people (n = 156), all adults 18 + years. Glycaemic status was determined by oral glucose tolerance test. Fasting values for glucose and insulin were used to estimate P-cell function and insulin resistance by homeostasis model assessment (HOMA). Analyses adjusted for age, sex, alcohol intake, education, body mass index and physical activity. Results For normoglycaemic persons (n 119) current smokers relative to non-smokers had high P-cell values [difference (95% confidence interval) 19.5 (17.1, 21.9)], while former smokers had low beta-cell values [difference -22.8 (-20.3, -25.3)] (P < 0.0001). For diabetic persons (n = 37) differences were of equivalent direction but greater magnitude (P < 0.0001). Insulin resistance was for normoglycaemic persons highest for current smokers, and for diabetic persons lowest for current smokers (P = 0.021). Conclusions Former smoking is associated with low P-cell function, and current smoking with high P-cell function, independent of diabetes in the Northwestern First Nation surveyed. Associations between smoking and insulin resistance vary according to glycaemic status. Smoking may have diametric acute and post-cessation effects on P-cell function and insulin resistance.