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Glucose-induced insulin secretion in response to a step increase in blood glucose concentrations follows a biphasic time course consisting of a rapid and transient first phase followed by a slowly developing and sustained second phase. Because Type 2 diabetes involves defects of insulin secretion, manifested as a loss of first phase and a reduction of second phase, it is important to understand the cellular mechanisms underlying biphasic insulin secretion. Insulin release involves the packaging of insulin in small (diameter ≈0.3 μm) secretory granules, the trafficking of these granules to the plasma membrane, the exocytotic fusion of the granules with the plasma membrane and eventually the retrieval of the secreted membranes by endocytosis. Until recently, studies on insulin secretion have been confined to the appearance of insulin in the extracellular space and the cellular events preceding exocytosis have been inaccessible to more detailed analysis. Evidence from a variety of secretory tissues, including pancreatic islet cells suggests, however, that the secretory granules can be functionally divided into distinct pools that are distinguished by their release competence and/or proximity to the plasma membrane. The introduction of fluorescent proteins that can be targeted to the secretory granules, in combination with the advent of new techniques that allow real-time imaging of granule trafficking in living cells (granule dynamics), has led to an explosion of our knowledge of the pre-exocytotic and post-exocytotic processes in the beta cell. Here we discuss these observations in relation to previous functional and ultra-structural data as well as the secretory defects of Type 2 diabetes.