Type 2 diabetes mellitus (DM) has been described as a new epidemic affecting the American pediatric population. This is coincident with an overall 33% increase in DM prevalence documented during the last decade. In 1992, type 2 DM was a rare occurrence in most pediatric centers. By 1994, it represented up to 16% of new cases in urban areas, and by 1999, the incidence of new type 2 DM diagnoses ranged between 8% and 45%, depending on geographic location. These patients have been observed primarily in African American, Mexican American, Native American, and Asian American children and youth. As in the adult population, type 2 DM in children and youth occurs as a result of insulin resistance coupled with relative beta-cell failure. While there appears to be a host of potential genetic and environmental risk factors for these aberrations, perhaps the most significant risk factor is obesity. Other risk factors include a family history of type 2 DM, puberty, intrauterine exposure to DM, sedentary lifestyle, female gender, and certain ethnicities. To date, few studies have addressed the role of physical activity and nutrition counseling in improving glycemic outcome, the most effective ways to reduce cardiovascular risk, or the most effective treatment regimens for this population. Once type 2 DM is established, the persistence of obesity often interferes with the response to treatment and exacerbates the comorbidities of hypertension, dyslipidemia, atherosclerosis, and polycystic ovarian syndrome (PCOS). Since fewer than 10% of youth with type 2 DM can be treated with diet and exercise alone, pharmacological intervention is generally required to achieve normoglycemic targets. In most surveys, practitioners prescribe insulin or an oral agent, most often metformin. Specific treatment algorithms for pediatric patients with type 2 DM need to be rigorously investigated.