Aging is a critical risk factor for impaired glucose tolerance and diabetes. In Japan, 8.9 million people are reported to have diabetes, and 37% of those are over the age of 70. In this review, we summarize the current evidence on how aging affects pancreatic beta cell function, beta cell mass, insulin secretion and insulin sensitivity. The pathogenesis of type 2 diabetes (T2DM) in aging is characterized by two major features: impaired insulin secretion and peripheral insulin resistance. Understanding the mechanism that lead to impaired glucose homeostasis and T2DM in the elderly will lead to development of novel treatments that will prevent or delay diabetes, substantially improve quality of life and ultimately increase overall life span.