Controlled clinical trials have shown that optimal glycemic control can prevent the microvascular complications of type 2 diabetes mellitus; considerable epidemiological data suggest that this may also be true for macrovascular complications. However, this is frequently not achieved. Consequently, research efforts have been undertaken to better understand the pathophysiology of this disorder. It is now well recognized that 2 factors are involved: impaired beta-cell function and insulin resistance. Prospective studies of high-risk populations have shown insulin-resistance and/ or insulin-secretory defects before the onset of impaired glucose tolerance. Thus, there has been a long-standing debate whether an alteration in insulin sensitivity or in insulin secretion is the primary genetic factor. Most of the available evidence favors the view that type 2 diabetes is a heterogeneous disorder in which the major genetic factor is impaired beta-cell function and insulin resistance is the major acquired factor. Superimposition of insulin resistance on a beta cell that cannot appropriately compensate leads to deterioration in glucose tolerance. Therefore, clinicians managing type 2 diabetes must reduce insulin resistance and augment and/or replace beta-cell function.