Insulin resistance is a common pathogenetic feature of type 2 diabetes. However, hyperglycemia would not develop if a concomitant defect in insulin secretion were not present. Impaired insulin secretion results from functional and survival defects of the beta-cell. The functional defects can be demonstrated early in the natural history of diabetes and they are hallmarked by abnormal pulsatility of basal insulin secretion and loss of first-phase insulin release in response to a glucose challenge. Moreover, a significant reduction of the beta-cell mass is apparent at the time of the diagnosis of diabetes. The progressive increase in glucose levels, that seems to characterize the natural history of type 2 diabetes, has been claimed to be largely due to progressive reduction of function and mass of beta-cells. Although a genetic predisposition is likely to account for impaired insulin secretion, chronic exposure to hyperglycemia and high circulating FFA is likely to contribute to both functional and survival defects. The disturbance in the endocrine activity of the pancreas is not limited to insulin, since a concomitant increase in fasting plasma glucagon and impaired suppression after the ingestion of an oral glucose load are often observed. This alteration becomes prominent after the ingestion of a mixed meal, when plasma glucagon remains much higher in the diabetic patient as compared to normal individuals. The disproportionate changes in the plasma concentration of the two pancreatic hormones is clearly evident when the insulin:glucagon molar ratio is considered. It is the latter that mainly affects hepatic glucose production. Because of the reduction of the insulin:glucagon molar ratio basal endogenous glucose concentration will be higher causing fasting hyperglycemia, while the hepatic glucose output will not be efficiently suppressed after the ingestion of a meal, contributing to excessive post-prandial glucose rise. Correcting beta- and alpha-cell dysfunction becomes, therefore, an attractive and rational therapeutic approach, particularly in the light of new treatments that may directly act on these pathogenetic mechanisms of type 2 diabetes.