Objective. To investigate changes in the glycated hemoglobin A1c (A1c) level and those in β cell function and insulin resistance in newly diagnosed and drug naive type 2 diabetes patients and to evaluate the relationship between them. Design and Methods. A total of 818 newly diagnosed diabetic individuals who were ≥40 years of age were recruited. The subjects were grouped by A1c values (<6.5%, 6.5–7%, 7-8%, 8-9%, and ≥9%). The homeostasis model assessment (HOMA) was used to evaluate pancreatic β cell function (HOMA-β) and insulin resistance (HOMA-IR). ANOVA, t-tests, and binary logistic regression analysis were used for data analysis. Results. Compared with subjects with A1c values <6.5%, individuals with an A1c of 6.5–7% exhibited an increased HOMA-β index. However, the HOMA-β index was significantly decreased at A1c values ≥7% and further decreased by 9.3% and by 23.7%, respectively, at A1c values of 7-8% and 8-9%. As A1c increased to ≥9%, a 62% reduction in β cell function was observed, independently of age, gender, body mass index (BMI), blood pressure (BP), blood lipids, and hepatic enzyme levels. Meanwhile, insulin resistance was significantly increased with an increase in A1c values. Conclusions. Elevated A1c values (≥7%) were associated with substantial reductions in β cell function.