Low birth weight is an important risk factor for type 2 diabetes in later life. Maturity-onset diabetes of the young has been linked to genetic sequence abnormalities in transcription factors known to be involved in endocrine pancreatic development. These observations suggest that both the maternal environment and the fetal genome can influence the number and/or function of pancreatic beta cells in early life, and that this has life-long implications for postnatal diabetes. This article reviews the evidence that suggests that beta cells derive from a neogenic process within the pancreatic ductal epithelium, controlled by specific transcription factors and locally acting peptide growth factors. In rodents, many of the fetal phenotypes of beta cells are destroyed during neonatal life in a developmental apoptosis and are replaced by a second wave of neogenesis. This results in islets with insulin release characteristics suited to postnatal life. The timing and amplitude of these ontological events are altered by nutritional sufficiency, and this may be mediated by changes in pancreatic growth factor expression, particularly of the IGF axis. Because beta-cell plasticity after the perinatal period is limited, a dysfunctional programming of beta-cell ontogeny may present a long-term risk factor for glucose intolerance and type 2 diabetes. This critical window of pancreatic development is likely to occur in third trimester of human development.