Iatrogenic hypoglycaemia is a well-known complication of insulin therapy in patients with diabetes mellitus and a limiting factor for glycaemic control. In a setting of endogenous insulin deficiency (type 1 and advanced type 2 diabetes), one episode of hypoglycaemia reduces both counterregulatory hormone responses to and subjective awareness of subsequent hypoglycaemia, thus impairing physiological defences against hypoglycaemia. This phenomenon may lead to a vicious cycle of recurrent hypoglycaemia and glucose counterregulatory failure, of which hypoglycaemia unawareness (i.e. the inability to perceive symptoms of hypoglycaemia) is the clinical representative. The underlying mechanism of hypoglycaemia-induced counterregulatory failure has not yet been disclosed. Patients with clinical hypoglycaemia unawareness are at high risk of severe hypoglycaemia that requires third-party assistance. Management options include avoidance of hypoglycaemic events and optimisation of insulin therapy to limit deterioration of glycaemic control associated with hypoglycaemia avoidance. Several counterregulatory-stimulating agents have been found to improve hypoglycaemic awareness in small clinical trials, but none have been tested in sufficiently large randomised studies to justify their use in daily practice. More research is required to elucidate the pathogenesis of counterregulatory failure and to develop adequate treatment strategies.