Type 2 diabetes (T2DM) is a common complex metabolic disorder that has a strong genetic predisposition. During the past decade, progress in genetic association studies has enabled the identification of at least 75 independent genetic loci for T2DM, thus allowing a better understanding of the genetic architecture of T2DM. International collaborations and large-scale meta-analyses of genome-wide association studies have made these achievements possible. However, whether the identified common variants are causal is largely unknown. In addition, the detailed mechanism of how these genetic variants exert their effect on the pathogenesis of T2DM requires further investigation. Currently, there are ongoing large-scale sequencing studies to identify rare, functional variants for T2DM. Environmental factors also have a crucial role in the development of T2DM. These could modulate gene expression via epigenetic mechanisms, including DNA methylation, histone modification and microRNA regulation. There is evidence that epigenetic changes are important in the development of T2DM. Recent studies have identified several DNA methylation markers of T2DM from peripheral blood and pancreatic islets. In this review, we will briefly summarize the recent progress in the genetic and epigenetic research on T2DM and discuss how environmental factors, genetics and epigenetics can interact in the pathogenesis of T2DM.