Hypoglycaemia is a frequent and greatly feared side-effect of insulin therapy, and a major obstacle to achieving near-normal glucose control. This review will focus on the more recent developments in our understanding of the mechanisms that underlie the sensing of hypoglycaemia in both non-diabetic and diabetic individuals, and how this mechanism becomes impaired over time. The research focus of my own laboratory and many others is directed by three principal questions. Where does the body sense a falling glucose? How does the body detect a falling glucose? And why does this mechanism fail in Type 1 diabetes? Hypoglycaemia is sensed by specialized neurons found in the brain and periphery, and of these the ventromedial hypothalamus appears to play a major role. Neurons that react to fluctuations in glucose use mechanisms very similar to those that operate in pancreatic B- and A-cells, in particular in their use of glucokinase and the K(ATP) channel as key steps through which the metabolic signal is translated into altered neuronal firing rates. During hypoglycaemia, glucose-inhibited (GI) neurons may be regulated by the activity of AMP-activated protein kinase. This sensing mechanism is disturbed by recurrent hypoglycaemia, such that counter-regulatory defence responses are triggered at a lower glucose level. Why this should occur is not yet known, but it may involve increased metabolism or fuel delivery to glucose-sensing neurons or alterations in the mechanisms that regulate the stress response.