HDL has long been known for its role in reverse cholesterol transport, thought in part to explain the well-recognized links between low levels of HDL-C and cardiovascular disease. The past decade has seen increasing evidence from epidemiological, basic science and early human intervention studies that HDL biology is more complex and may influence the onset and progression of type 2 diabetes. Research has identified multiple potential pathways by which higher HDL particle concentrations or functional improvements may ameliorate the development and progression of the disease. These include promotion of insulin secretion and pancreatic islet beta-cell survival, promotion of peripheral glucose uptake, and suppression of inflammation. The relationships between HDL-C levels, commonly used in clinical practice, and HDL particle number, size and various HDL functions is complex, and is intimately linked with triglyceride metabolism. The complexity of these relationships is amplified in diabetes, which negatively impacts multiple aspects of lipoprotein biology. This article reviews the rationale for, and potential of, HDL-based anti-diabetic pharmacotherapy, with an emphasis on the particular challenges posed by diabetes-related HDL dysfunction, and on the difficulties of selecting appropriate targets and HDL-related biomarkers for research and for clinical practice. We discuss aspects of HDL metabolism that are known to be altered in type 2 diabetes, potentially useful measures of HDL-targeted therapy in diabetes, and review early intervention studies in humans. These areas provide a firm foundation for further research and knowledge expansion in this intriguing area of human health and disease.