Transient (TNDM) and permanent neonatal diabetes mellitus (PNDM) are rare conditions occurring in one in 400,000-500,000 live births. In TNDM, growth-retarded infants develop diabetes in the first few weeks of life only to go into remission in a few months with later relapse as permanent type 2 diabetes, often around the time of adolescence. We believe that pancreatic dysfunction in this condition is maintained throughout life with relapse initiated at times of metabolic stress such as puberty or pregnancy. The mechanisms involved in this rare condition may inform on fetal pancreatic development, islet cell physiology and predisposition to type 2 diabetes. In PNDM, insulin secretory failure occurs in the early postnatal period. A number of conditions are associated with PNDM, some of which have been elucidated at the molecular level. Insulin therapy is difficult to manage in the neonatal period, and in experienced hands, the insulin pump may provide a valuable tool to administer insulin.