Diabetes mellitus (DM) is being diagnosed at an alarming rate around the world. More than 90% of the estimated 200 million affected persons with diabetes worldwide have type 2 DM, an often clinically silent disorder. In the United States, nearly half of the estimated 16 million persons with diabetes remain undiagnosed. Type 2 diabetes is preceded by a long period of impaired glucose tolerance (IGT), a potentially reversible metabolic state associated with increased risk for macrovascular complications. At the time of diagnosis more than one-third of patients have already developed long-term complications of diabetes. Genetic and acquired factors contribute to the pathogenesis of type 2 diabetes. The pathophysiological hallmarks consist of progressive insulin resistance, pancreatic β-cell dysfunction, and excessive hepatic glucose production. The ideal treatment for type 2 diabetes should correct insulin resistance, β-cell dysfunction, and normalize hepatic glucose output, as well as prevent, delay, or reverse diabetic complications. Emerging targets for therapy of type 2 diabetes include inhibition of gluconeogenesis, lipolysis, and fatty acid oxidation, as well as stimulation of β3-adrenergic receptors. Drug intervention for obesity is a legitimate adjunct to diabetes management. Additional drug targets include interventions to prevent or delay the progression of specific complications. Finally, primary prevention of type 2 diabetes is an important emerging strategy. The specific pharmacological agents acting at the various targets are discussed in this review. A targeted approach to the multiple underlying pathophysiologic processes offers the best chance of controlling diabetes and complications.