Aim: We investigated the effect of 52-week treatment with liraglutide, a glucagon-like peptide 1 receptor agonist, on glucose tolerance and incretin effect in women with previous gestational diabetes mellitus (pGDM). Materials and Methods: Women with overweight/obesity and pGDM were randomized to once daily subcutaneous liraglutide 1.8 mg or placebo for 52 weeks. Participants underwent oral glucose tolerance test (OGTT) and isoglycaemic intravenous glucose infusion at baseline and at 52 weeks, and an additional OGTT after the drug wash-out. Results: In total, 104 women [age: mean ± SD, 38 ± 5 years; fasting plasma glucose (FPG): 5.5 ± 0.4 mmol/L; glycated haemoglobin (HbA1c): 33 ± 4 mmol/mol, bodyweight: 88.2 ± 14.8 kg, body mass index: 31.1 ± 4.3 kg/m²] were assigned to liraglutide (n = 49) or placebo (n = 55). Estimated treatment difference (ETD) for area under curve during OGTT was −173 (95% confidence interval −250 to −97) mmol/L × min, p <.0001, but after wash-out the difference disappeared [ETD 58 (−30 to 146) mmol/L × min, p =.536]. Liraglutide reduced FPG [ETD −0.2 (−0.4 to −0.1) mmol/L, p =.018], HbA1c [−2.2 (−3.5 to −0.8) mmol/mol, p =.018] and bodyweight [−3.9 (−6.2 to −1.6) kg, p =.012]. No change in the incretin effect was observed. The number of women with prediabetes was reduced from 64% to 10% with liraglutide vs. 50% with placebo [adjusted odds ratio 0.10 (0.03-0.32), p =.002]. Conclusions: Treatment with liraglutide for 52 weeks improved glucose tolerance, FPG, HbA1c and bodyweight in women with overweight/obesity and pGDM. Progression to prediabetes while on drug was markedly reduced, but after a 1-week drug wash-out, the effect was lost.