Dietary fat intake is correlated with increased insulin resistance (IR). However, it is unknown whether gene–diet interaction modulates the association. This study estimated heritability of IR measures and the related genetic correlations with fat intake, and tested whether dietary fat intake modifies the genetic influence on type 2 diabetes (T2D)-related traits in Chinese child twins. We included 622 twins aged 7–15 years (n 311 pairs, 162 monozygotic (MZ), 149 dizygotic (DZ)) from south-eastern China. Dietary factors were measured using FFQ. Structural equation models were fit using Mx statistical package. The intra-class correlation coefficients for all traits related to T2D were higher for MZ twins than for DZ twins. Dietary fat and fasting serum insulin (additive genetic correlation (rA) 0·20; 95 % CI 0·08, 0·43), glucose (rA 0·12; 95 % CI 0·01, 0·40), homoeostasis model of assessment-insulin resistance (Homa-IR) (rA 0·22; 95 % CI 0·10, 0·50) and the quantitative insulin sensitivity check index (Quicki) (rA −0·22; 95 % CI −0·40, 0·04) showed strong genetic correlations. Heritabilities of dietary fat intake, fasting glucose and insulin were estimated to be 52, 70 and 70 %, respectively. More than 70 % of the phenotypic correlations between dietary fat and insulin, glucose, Homa-IR and the Quicki index appeared to be mediated by shared genetic influence. Dietary fat significantly modified additive genetic effects on these quantitative traits associated with T2D. Analysis of Chinese twins yielded high estimates of heritability of dietary fat intake and IR. Genetic factors appear to contribute to a high proportion of the variance for both insulin sensitivity and IR. Dietary fat intake modifies the genetic influence on blood levels of insulin and glucose, Homa-IR and the Quicki index.