BACKGROUND: Type 2 diabetes (T2D) is a leading cause of morbidity and mortality worldwide. Despite the availability of multiple glucose-lowering agents, only half of individuals with T2D achieve the recommended HbA1c target of < 7.0%. Precision medicine approaches that leverage patient-specific markers offer a promising strategy to improve therapeutic outcomes. The PAM gene encodes the sole enzyme responsible for amidating bioactive hormones, including GLP-1, and harbors two hypomorphic T2D-risk alleles (p.D563G and p.S539W); however, whether PAM regulates GLP-1, a key amidated incretin hormone, and whether this influences response to GLP-1 receptor agonist (GLP-1RA) therapy, remains unknown. METHODS: PAM amidation activity, postprandial GLP-1 levels, and the incretin effect were measured in carriers of PAM T2D-risk alleles and matched non-carriers from the Oxford Biobank in a prospective observational study and in Danish cohorts. Inducible whole-body Pam knockout mice were generated; gastric emptying was assessed by paracetamol absorption assay with and without exendin-4. Glycemic response to GLP-1RAs was evaluated in a meta-analysis of 1,119 participants across three cohorts (IMI-DIRECT, GoDARTS, PRIBA), with comparative assessment of sulphonylurea, metformin, and DPP-4 inhibitor response. RESULTS: Carriers of p.S539W and p.D563G alleles demonstrated 52% and 20% reductions in serum PAM amidation activity, respectively. Both human carriers and Pam knockout mice exhibited elevated circulating GLP-1 levels; however, p.S539W carriers showed an 18% reduction in endogenous GLP-1 sensitivity. PamKO mice displayed accelerated gastric emptying that was refractory to exendin-4, alongside impaired cAMP signaling downstream of the GLP-1 receptor in the pylorus. In the clinical meta-analysis, p.S539W carriers showed a significantly attenuated HbA1c reduction following GLP-1RA therapy (− 0.69% vs. − 1.24% in non-carriers; p = 0.025), representing a 44% relative loss of glycemic benefit; only 11.5% of carriers achieved HbA1c < 7% compared with 25.3% of non-carriers. No differences in response to sulphonylureas, metformin, or DPP-4 inhibitors were observed. CONCLUSIONS: Hypomorphic PAM T2D-risk alleles reduce amidating enzyme activity, elevate circulating GLP-1 levels, and impair GLP-1 post-receptor signaling, culminating in a selective and clinically meaningful reduction in GLP-1RA efficacy. These findings establish PAM genotype as a novel pharmacogenomic determinant of GLP-1RA response, supporting its incorporation into precision medicine frameworks to optimize drug selection in T2D management. TRIAL REGISTRATION: NCT02723110, NCT02465515 and NCT01144338. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1186/s13073-026-01630-0.