Epidemiological studies show coffee consumption to be correlated to large risk reductions in the prevalence of type 2 diabetes (T2D). Such correlations are seen with decaffeinated and caffeinated coffee, and occur regardless of gender, method of brewing, or geography. They also exist despite clear evidence showing that caffeine causes acute postprandial hyperglycemia and lower whole-body insulin sensitivity. As the beneficial effects of coffee consumption exist for both decaffeinated and caffeinated coffee, a component of coffee other than caffeine must be responsible. This review examines the specific coffee compounds responsible for coffee's effects on T2D, and their potential physiological mechanisms of action. Being plant-derived, coffee contains many beneficial compounds found in fruits and vegetables, including antioxidants. In fact, coffee is the largest source of dietary antioxidants in industrialized nations. When green coffee is roasted at high temperatures, Maillard reactions create a number of unique compounds. Roasting causes a portion of the antioxidant, chlorogenic acid, to be transformed into quinides, compounds known to alter blood glucose levels. Coffee consumption may also mediate levels of gut peptides (glucose-dependent insulinotropic polypeptide and glucagon-like peptide-1), hormones intimately involved in the regulation of satiety and insulin secretion. Finally, coffee may have prebiotic-like properties, altering gut flora and ultimately digestion. In summary, it is evident that a better understanding of the role of coffee in the development and prevention of T2D has the potential to uncover novel therapeutic targets and nutraceutical formulations for the disease.