Background and aims: Type 2 diabetes mellitus (T2DM) is characterized by progressive metabolic deterioration due to a decline in β-cell function. The relation between glucagon and insulin secretion in the setting of T2DM is still not clear. The present study evaluated relationship between glucagon level, glycemic status, and β-cell indices in newly diagnosed Indian T2DM patients.Methods: Patients with HbA1c > 8.5% and/or fasting plasma glucose > 200 mg/dl were treated with insulin for 6 months (May 2017 to December 2018). Metabolic parameters and hormonal tests (insulin, glucagon, C-peptide in the fasting state, and 2-h meal stimulated C-peptide) were assessed at baseline and after 6 months of insulin treatment.Results: Seventy-five newly diagnosed T2DM patients were enrolled in the study, of which 56 completed the study. At baseline a significant correlation was observed between fasting plasma glucagon and plasma glucose (r = 0.33, p = 0.04), insulin level (r = − 0.38, p = 0.004), and HOMA B (r = − 0.347, p = 0.009). After 6 months of insulin treatment, a significant (p = 0.001) change in glycemic status (− 35.28%), fasting glucagon level (− 45.84%), and an increase in fasting and meal stimulated C-peptide (144.44%) was observed. A significant inverse correlation between percentage change of plasma glucagon and plasma insulin was noted (r = − 0.282, p = 0.035).Conclusion: Among newly diagnosed T2DM patients with moderate to severe hyperglycemia fasting glucagon correlated positively with glycemic status and negatively with insulin levels at baseline. Early and intensive insulin treatment was associated with good glycemic control and improvement in glucagon and insulin levels. A modest reciprocal correlation was noted between α- and β-cell function in these patients.