Insulin resistance (IRe) and a failure of insulin secretion are the major features of the early pathophysiology of type-2 diabetes mellitus (T2D) but the etiology is still not well understood. We suggest that: 1. The cellular mechanisms that protect against oxidative stress per se are capable of creating a reactive species-dependent IRe. 2. Reactive species-induced mitochondrial dysfunction can lead to disruption of lipid metabolism, increased intracellular lipid content, and can also contribute to lipid-dependent IRe in myocytes and adipocytes. 3. Metabolic secretagogues that stimulate insulin secretion by the activation of initial steps in the glucose-stimulated insulin secretion pathway can also lead to increased reactive species production and cellular destruction contributing to beta-cell damage and apoptosis. These events that underlie the repair mechanisms in beta-cells, muscle and adipocytes, are important factors in the early etiology of T2D, leading to both IRe and decreased insulin secretion. This hypothesis is supported by data from multiple disciplines and includes aging, obesity and genetic factors in promoting multiple failures in this system leading to the onset of T2D. On the basis of this hypothesis therapeutic strategies should be directed towards increasing insulin secretion and reducing IRe without increasing reactive species production or concentration. Pharmacological or other approaches that result in the activation of mitochondrial biogenesis could be beneficial for both IRe and T2D.