The capacity to match carbohydrate (CHO) utilization with availability is impaired in insulin-resistant, obese adults at rest. Understanding exogenous carbohydrate (CHOexo) oxidation during exercise and its association to insulin resistance (IR) is important, especially in children at risk for type 2 diabetes. Our objective was to examine the oxidative efficiency of CHOexo during exercise in obese children with normal glucose tolerance (NGT) or impaired glucose tolerance (IGT). Children attended two visits and were identified as NGT ( n = 22) or IGT ( n = 12) based on 2-h oral glucose tolerance test (OGTT) glucose levels of <7.8 mmol/l or ≥7.8 mmol/l, respectively. Anthropometry, body composition, and aerobic fitness (V̇o2max) were assessed. Insulin and glucose at baseline, 30, 60, 90, and 120 min during the OGTT were used to calculate measures of insulin sensitivity. On a separate day, a 13C-enriched CHO drink was ingested before exercise (3 × 20 min bouts) at 45% V̇o2max. Breath measurements were collected to calculate CHOexo oxidative efficiency. CHOexo oxidative efficiency during exercise was similar in IGT (17.0 ± 3.6%) compared with NGT (17.1 ± 4.4%) ( P = 0.90) despite lower whole body insulin sensitivity in IGT at rest ( P = 0.02). Area under the curve for insulin (AUCins) measured at rest during the OGTT was greater in IGT compared with NGT ( P = 0.04). The ability of skeletal muscle to utilize CHOexo was not impaired during exercise in children with IGT.