Although type 2 diabetes has been traditionally understood as a metabolic disorder initiated by insulin resistance, it has recently become apparent that an impairment in insulin secretion contributes to its manifestation and may play a prominent role in its early pathophysiology. The genetic dissection of Mendelian and, more recently, polygenic types of diabetes confirms the notion that primary defects in insulin synthesis, processing and/or secretion often give rise to the common form of this disorder. This concept, first advanced with the discovery and physiological characterisation of various genetic subtypes of MODY, has been extended to other forms of monogenic diabetes (e.g. neonatal diabetes). It has also led to the identification of common risk variants via candidate gene approaches (e.g. the E23K polymorphism in KCNJ11 or common variants in the MODY genes), and it has been validated by the description of the robust physiological effects conferred by polymorphisms in the TCF7L2 gene. More recently, the completion and integration of genome-wide association scans for this disease has uncovered a number of heretofore unsuspected variants, several of which also affect insulin secretion. This review provides an up-to-date account of genetic loci that influence risk of common type 2 diabetes via impairment of beta cell function, outlines their presumed mechanisms of action, and places them in the context of gene–gene and/or gene–environment interactions. Finally, a strategy for the analogous discovery of insulin resistance genes is proposed.