The pathological sequence for type 2 diabetes is complex and entails many different elements that act in concert to cause that disease. This review proposes a sequence of events and how they interact by a careful analysis of the human and animal model literature. A genetic predisposition must exist, although to date very little is known about specific genetic defects in this disease. Whether the diabetes phenotype will occur depends on many environmental factors that share an ability to stress the glucose homeostasis system, with the current explosion of obesity and sedentary lifestyle being a major cause of the worldwide diabetes epidemic. We also propose that a lowered beta-cell mass either through genetic and/or beta-cell cytotoxic factors predisposes for glucose intolerance. As the blood glucose level rises even a small amount above normal, then acquired defects in the glucose homeostasis system occur--initially to impair the beta cell's glucose responsiveness to meals by impairing the first phase insulin response--and cause the blood glucose level to rise into the range of impaired glucose tolerance (IGT). This rise in blood glucose, now perhaps in concert with the excess fatty acids that are a typical feature of obesity and insulin resistance, cause additional deterioration in beta-cell function along with further insulin resistance, and the blood glucose levels rise to full-blown diabetes. This sequence also provides insight into how to better prevent or treat type 2 diabetes, by studying the molecular basis for the early defects, and developing targeted therapies against them.