Data derived from several recent studies implicate peroxisome proliferator-activated receptor-gamma coactivator-1alpha (PGC-1alpha) in the pathogenesis of type 2 diabetes. Lacking DNA binding activity itself, PGC-1alpha is a potent, versatile regulator of gene expression that co-ordinates the activation and repression of transcription via protein-protein interactions with specific, as well as more general, factors contained within the basal transcriptional machinery. PGC-1alpha is suggested to play a pivotal role in the control of genetic pathways that result in homeostatic glucose utilisation in liver and muscle, beta cell insulin secretion and mitochondrial biogenesis. This review focuses on the role of PGC-1alpha in glucose metabolism and considers how PGC-1alpha links cellular glucose metabolism, insulin sensitivity and mitochondrial function, and why defects in PGC-1alpha expression and regulation may contribute to the pathophysiology of type 2 diabetes in humans.