Type 2 diabetes (T2D) is a complex metabolic disorder with an increasing incidence worldwide. The disease is characterized by a combination of impairment in insulin secretion from pancreatic beta cells and insulin resistance of peripheral tissues, especially muscle and liver, resulting from interaction between multiple environmental and genetic factors. Life-style changes and obesity are the major causes for the current epidemic of T2D. The rapidly increasing prevalence of Type 2 diabetes makes it a major healthcare problem worldwide. In the developing nations this poses a serious health care burden. In recent years there has been a swing in the onset to younger age group. To date, Genome-Wide Association Scan (GWAS) studies have identified more than 65 common genetic variants associated with T2D or glucose/insulin levels. The recently discovered genes by GWAS suggest a shift from genes involved in insulin action to those involved in insulin secretion, indicating pivotal role of beta- cell dysfunction in the pathogenesis of T2D. However, in most cases the causal variants are not known. Also, the molecular mechanism of the patho-physiology of the disease is still obscure. Functional studies will be required to identify the mechanisms by which the associated signals impair islet function and increase risk of T2D. Understanding the pathophysiology of T2D will provide new and useful information(s) for prevention of the disease and development of new drugs for the treatment of T2D. Pharmacogenetics is another promising clinical application of the genetic findings for T2D. Also, efforts are being made to understand the genetic basis of differences in disease susceptibility by studying the genetic variations among different populations, an area that is important for the future of medicine.