Type 2 diabetes mellitus is increasing worldwide with a trend of declining age of onset. It is characterized by insulin resistance and a progressive loss of beta-cell function. The ability to secrete adequate amounts of insulin is determined by the functional integrity of beta-cells and their overall mass. Glucose, the main regulator of insulin secretion and production, exerts negative effects on beta-cell function when present in excessive amounts over a prolonged period. The multiple metabolic aberrations induced by chronic hyperglycemia in the beta-cell include increased sensitivity to glucose, increased basal insulin release, reduced response to stimulus to secrete insulin, and a gradual depletion of insulin stores. Inadequate insulin production during chronic hyperglycemia results from decreased insulin gene transcription due to hyperglycemia-induced changes in the activity of beta-cell specific transcription factors. Hyperglycemia may negatively affect beta-cell mass by inducing apoptosis without a compensatory increase in beta-cell proliferation and neogenesis. The detrimental effect of excessive glucose concentrations is referred to as 'glucotoxicity'. The present review discusses the role of glucotoxicity in beta-cell dysfunction in type 2 diabetes mellitus.