Type 2 diabetes mellitus is a complex disease characterized by β-cell failure in the setting of insulin resistance. In early stages of the disease, pancreatic β-cells adapt to insulin resistance by increasing mass and function. As nutrient excess persists, hyperglycemia and elevated free fatty acids negatively impact β-cell function. This happens by numerous mechanisms, including the generation of reactive oxygen species, alterations in metabolic pathways, increases in intracellular calcium and the activation of endoplasmic reticulum stress. These processes adversely affect β-cells by impairing insulin secretion, decreasing insulin gene expression and ultimately causing apoptosis. In this review, we will first discuss the regulation of β-cell mass during normal conditions. Then, we will discuss the mechanisms of β-cell failure, including glucotoxicity, lipotoxicity and endoplasmic reticulum stress. Further research into mechanisms will reveal the key modulators of β-cell failure and thus identify possible novel therapeutic targets. Type 2 diabetes mellitus is a multifactorial disease that has greatly risen in prevalence in part due to the obesity and inactivity that characterize the modern Western lifestyle. Pancreatic β-cells possess the potential to greatly expand their function and mass in both physiologic and pathologic states of nutrient excess and increased insulin demand. β-cell response to nutrient excess occurs by several mechanisms, including hypertrophy and proliferation of existing β-cells, increased insulin production and secretion, and formation of new β-cells from progenitor cells [1, 2]. Failure of pancreatic β-cells to adequately expand in settings of increased insulin demand results in hyperglycemia and diabetes. In this review, we will first discuss the factors involved in β-cell growth and then discuss the mechanisms by which β-cell expansion fails and leads to β-cell failure and diabetes (Fig. 1).