A characteristic and dominant feature of type 2 diabetes is a reduction in beta-cell function that is associated with a decrease in beta-cell volume. A decline in the first-phase insulin response following intravenous glucose administration can be demonstrated as the fasting glucose concentration increases. This response is completely absent before the glucose threshold that defines diabetes has been reached and at a time when beta-cells are clearly still present, implying that a functional beta-cell lesion has to exist independent of beta-cell loss. Surgical or chemical reductions of up to 65% of beta-cell volume demonstrate that functional adaptation of the normal beta-cell prevents a rise in fasting glucose or reduction in first-phase insulin response. However, the ability of glucose to potentiate the beta-cell's response to non-glucose secretagogues is reduced and is more closely associated with the reduction in beta-cell volume. The future, in terms of prevention and treatment of type 2 diabetes, lies in the ability to prevent and revert both beta-cell loss and dysfunction. However, until beta-cell volume can be quantified reliably and non-invasively, we will need to rely on the ability of glucose to potentiate insulin release as the best surrogate estimate of the number of beta-cells.