The relationship between pancreatic cancer (PC) and diabetes is controversial. While some investigators assume that type II diabetes is a predisposition to PC, recent data argue that diabetes and altered glucose metabolism are a consequence of PC, and yet, the clinical presentation of the altered glucose metabolism in these patients varies considerably. Around 70% of patients with PC have impaired glucose tolerance (IGT) or frank diabetes. Of these, nearly 60% show an improvement of IGT or diabetes after surgery, whereas the rest show only mild or no improvement. It appears that biologically there are three types of PC: (1) PC not associated with IGT or diabetes; (2) PC associated with IGT or diabetes in which the abnormality improves postoperatively; (3) PC associated with IGT or diabetes in which the abnormality does not improve postoperatively. Based on our own studies, we suggest that the reason for impaired glucose metabolism in most patients is the alteration of islet cells either by the carcinogen directly, or by diabetogenic substances released by cancer cells. The extent of the islet alteration (i.e. focal or diffuse) may determine whether the removal of tumor alone can improve the metabolic alteration. The elucidation of the mechanism is of immense importance for providing an early tumor marker and for developing preventative or therapeutic modalities.