Type 2 diabetes is associated with progressive beta-cell failure manifest as a decline in insulin secretion and increasing hyperglycemia. A growing body of evidence suggests that beta-cell failure in type 2 diabetes correlates with the formation of pancreatic islet amyloid deposits, indicating that islet amyloid may have an important role in beta-cell loss in this disease. Islet amyloid polypeptide (IAPP; amylin), the major component of islet amyloid, is co-secreted with insulin from beta-cells. In type 2 diabetes, this peptide aggregates to form amyloid fibrils that are toxic to beta-cells. The mechanism(s) responsible for islet amyloid formation in type 2 diabetes is still unclear but it appears that an increase in the secretion of IAPP, per se, is not sufficient. Other factors, such as impairment in the processing of proIAPP, the IAPP precursor, have been proposed to contribute to the development of islet amyloid deposits. Inhibitors of islet amyloid fibril formation might prevent the progression to beta-cell failure in type 2 diabetes and should therefore be considered as a therapeutic approach to treat this disease.