Type 2 diabetes is a familial disease and studies of both Caucasian and Japanese families have raised the possibility that a major susceptibility gene is involved. The majority of patients have both beta cell dysfunction and impaired insulin sensitivity but studies of relatives of Type 2 diabetic patients suggest that beta cell dysfunction is an early feature of the disease. Impaired insulin sensitivity, from acromegaly, Cushing's disease or steroid therapy, induces diabetes only in a small proportion of the population, and they may be those who have an inherited cell defect. We postulate that a single beta cell defect gene, on its own, may be insufficient to cause overt diabetes and would lead to life-long glucose intolerance unless associated with other defects such as impaired insulin sensitivity. The nature of such a postulated beta cell defect is uncertain. Whilst it has been reported to be specific to glucose, and not to non-glucose stimuli, this feature may be secondary to hyperglycaemia. The occurrence of islet amyloid in 70-90% of Type 2 diabetic patients, and rarely in the normal population, raises the possibility that amyloid deposition causing disruption of the islet is a factor which might affect beta cell function. Amyloid formation may be a primary abnormality or could be secondary to beta cell dysfunction induced by hyperglycaemia. A major susceptibility gene might predispose a proportion, perhaps 10-15%, of a Caucasian population towards diabetes. The subsequent development of diabetes in a particular patient is likely to depend on many factors including other genetic factors, a sedentary life style and obesity. In different populations different genetic influences may operate, including abnormalities of insulin receptor genes and glucose transporter genes, which may allow a beta cell abnormality to become expressed clinically.