Roux-en-Y gastric bypass (RYGB) greatly improves glycaemic control in morbidly obese patients with type 2 diabetes, in many even before significant weight loss. Understanding the responsible mechanisms may contribute to our knowledge of the pathophysiology of type 2 diabetes and help identify new drug targets or improve surgical techniques. This review summarises the present knowledge based on pathophysiological studies published during the last decade. Taken together, two main mechanisms seem to be responsible for the early improvement in glycaemic control after RYGB: (1) an increase in hepatic insulin sensitivity induced, at least in part, by energy restriction and (2) improved beta cell function associated with an exaggerated postprandial glucagon-like peptide 1 secretion owing to the altered transit of nutrients. Later a weight loss induced improvement in peripheral insulin sensitivity follows.