Type 2 diabetes mellitus (DM) has been considered rare in the pediatric population. However, over the last decade, there has been a disturbing upswing in the rate of diagnosis of type 2 DM in the pediatric age group, mirroring the increasing rates of obesity in childhood. The pathophysiology of type 2 DM discussed in this article focuses on the delicate balance between insulin sensitivity and insulin secretion. The risk factors for youth-onset type 2 DM are presented, with careful evaluation of their impact on insulin sensitivity versus insulin secretion.