Type 2 diabetes results from pancreatic ß-cell failure in the setting of insulin resistance. This model of disease progression has received recent support from the results of genome-wide association studies that identify genes potentially regulating ß-cell growth and function as type 2 diabetes susceptibility loci. Normal ß-cell compensation for an increased insulin demand includes both enhanced insulin-secretory capacity and an expansion of morphological ß-cell mass, due largely to changes in the balance between ß-cell proliferation and apoptosis. Recent years have brought significant progress in the understanding of both extrinsic signals stimulating ß-cell growth as well as mediators intrinsic to the ß-cell that regulate the compensatory response. Here, we review the current knowledge of mechanisms underlying adaptive expansion of ß-cell mass, focusing on lessons learned from experimental models of physiologically occurring insulin-resistant states including diet-induced obesity and pregnancy, and highlighting the potential importance of interorgan cross talk. The identification of critical mediators of islet compensation may direct the development of future therapeutic strategies to enhance the response of ß-cells to insulin resistance.