Under normal conditions, insulin and glucagon are counter-regulatory hormones whose balanced action exhibits a relationship that ensures normoglycaemia. Elevated glucose levels following a meal stimulate pancreatic islet β cells to secrete insulin and islet α cells to downregulate production of glucagon. With declining glucose and insulin levels, α-cell production of glucagon is increased to stimulate hepatic glucose production, preventing fasting hypoglycaemia. In type 2 diabetes mellitus (T2DM), β-cell insulin response to glucose is blunted, including absence of early acute response, and α-cell response to glucose is impaired, resulting in absolute or relative hyperglucagonaemia and inappropriate hepatic glucose output that contributes to fasting hyperglycaemia. These changes are associated with structural and functional changes in pancreatic islets, including reduced β-cell mass and reduced β-cell:α-cell ratio. The role of the incretin hormone glucagon-like peptide-1 (GLP-1) in regulating glucose-dependent β-cell insulin production and glucose-dependent α-cell glucagon production has been used to develop GLP-1-based therapies. These therapies may reduce the imbalances among insulin and glucagon that characterise T2DM, resulting in improved glycaemic control.