Type 2 diabetes mellitus in children and adolescents is becoming an increasingly important public health concern throughout the world. This epidemic is closely associated with the increased prevalence of obesity among youth of all ethnic backgrounds, as increased visceral adipose tissue produces adipokines that increase insulin resistance. Type 2 diabetes represents one arm of the metabolic syndrome, which includes abdominal obesity, disturbed glucose regulation and insulin resistance, dyslipidemia, and hypertension. The treatment of type 2 diabetes and the metabolic syndrome poses a challenge for pediatric endocrinologists. This review provides information regarding diagnosis of type 2 diabetes in children, as well as prevention strategies, such as lifestyle modification and pharmacologic options for weight loss, including metformin, orlistat, and sibutramine. Pharmacologic treatment options, their modes of action, and clinical indications for use are also reviewed. Treatment regimens for youth-onset type 2 diabetes that are discussed include metformin, sulfonylureas, glucosidase inhibitors, thiazolidinediones, glucagon-like peptide-1, and insulin.