The rs738409(G) single nucleotide polymorphism (SNP) in the patatin-like phospholipase domain-containing 3 (PNPLA3) gene associates with increased risk and progression of nonalcoholic fatty liver disease (NAFLD). As the recently described severe insulin-resistant diabetes (SIRD) cluster specifically relates to NAFLD, this study examined whether this SNP differently associates with hepatic lipid content (hepatocellular lipids [HCL]) and insulin sensitivity in recent-onset diabetes.A total of 917 participants in the German Diabetes Study (GDS) underwent genotyping, hyperinsulinemic-euglycemic clamps with stable isotopic tracer dilution, and MRS.The G allele associated positively with HCL (β = 0.36, P < 0.01), independent of age, sex, and BMI across the whole cohort, but not in the individual clusters. Those with SIRD exhibited lowest whole-body insulin sensitivity compared with those with severe insulin-deficient (SIDD), moderate obesity-related (MOD), moderate age-related (MARD), and severe autoimmune diabetes (SAID) clusters (all P < 0.001). Interestingly, the SIRD group presented with higher prevalence of the rs738409(G) SNP compared with other clusters and the glucose-tolerant control group (P < 0.05). HCL was higher in the SIRD group (median 13.6% [1st quartile 5.8; 3rd quartile 19.1] compared with the MOD (6.4 % [2.1; 12.4], P < 0.05), MARD (3.0% [1.0; 7.9], P < 0.001), SAID (0.4% [0.0; 1.5], P < 0.001), and glucose-tolerant (0.9% [0.4; 4.9), P < 0.001) group. Although the PNPLA3 polymorphism did not directly associate with whole-body insulin sensitivity in SIRD, the G-allele carriers had higher circulating free fatty acid concentrations and greater adipose tissue insulin resistance compared with noncarriers (both P < 0.001).Members of the SIRD cluster are more frequently carriers of the rs738409(G) variant. The SNP-associated adipose tissue insulin resistance and excessive lipolysis may contribute to their NAFLD.