To understand the mechanism of insulin signalling and insulin resistance in the development of type 2 diabetes, it is necessary to elucidate the role of insulin and related signal molecules in normal cellular development and functions. A technique for addressing this problem, which is growing more and more important, is the generation and characterization of knockout animal models; such models allow in vivo study of the effects of a lack of a certain gene product, for example, a hormone or intracellular signalling molecule, on the viability, development and physiology of the animal. Besides the conventional form of knockout-which abolishes expression of the gene of interest in every cell of the body and during embryonic development-more recent technology permits the selective inactivation of genes in a tissue-specific and even time-controlled manner. With these techniques, it has become possible not only to examine the function of genes whose conventional inactivation would be lethal for the animal, but also to examine the specific functions that these genes have in certain tissues or at certain developmental stages. Here, we review the phenotype of mice resulting from both conventional and conditional inactivation of molecules in the insulin signalling cascade; this work has led to novel concepts in the understanding of insulin action and the development of insulin resistance.