Insulin resistance and beta-cell failure account for the complex clinical presentation of non-insulin-dependent diabetes mellitus (NIDDM). Insulin resistance primarily involves defective regulation of hepatic glucose production and the peripheral utilization of glucose. Considerable progress has been made in understanding the basic molecular biology, biochemistry, and physiology of these processes. Similarly, the mechanisms involved in insulin synthesis, processing, storage, and secretion are being elucidated. The relative contributions of insulin resistance and beta-cell failure are difficult to evaluate when the disease is fully established and clinically apparent but may be more obvious early, i.e., in people with impaired glucose tolerance or individuals at risk for developing the disease. The latter can be identified because there is a strong genetic determinant for NIDDM; the offspring of two diabetic parents have a markedly increased incidence of the disease. In addition to genetic factors, environmental components contribute to the multifactorial etiology of NIDDM. Efforts to establish the importance of these different factors will be assisted if a metabolic staging of NIDDM can be agreed on. This staging, which should correlate the pathophysiological events responsible for the transition from normal glucose tolerance to frank NIDDM with clinical status, would be based on what is known about insulin resistance and beta-cell function. Staging will also provide for a classification of the number of causes that lead to NIDDM, if indeed, there is more than one cause of the general phenotype. Strategies for defining the gene or genes responsible for NIDDM can be subsequently devised based on the temporal sequence of appearance of pathophysiological defects and what is known about the molecular biology of insulin action. Understanding the defective metabolic code that results in NIDDM will require the concerted efforts of investigators from various disciplines. This is used throughout the text to avoid confusion with those people who have impaired glucose tolerance but not NIDDM.