Maturity‐onset diabetes of the young (MODY) can be defined by the clinical characteristics of early‐onset Type 2 (non‐insulin‐dependent) diabetes and autosomal dominant inheritance. Mutations in four genes have been shown to cause MODY: glucokinase, hepatic nuclear factor 1 alpha (HNF1α), hepatic nuclear factor 4 alpha (HNF4α) and insulin protein factor 1 (IPF1). In white Caucasians it is now possible to define the gene in most patients with a clinical diagnosis of MODY. Each gene involved in MODY has its own specific clinical and physiological characteristics. Patients with mutations of the glucokinase gene have mild fasting hyperglycaemia throughout life, and rarely require medication or develop microvascular complications. The principle pathophysiology is stable beta‐cell dysfunction characterized by reduced sensing of glucose by the pancreas. Patients with mutations in HNF1α have normal glucose tolerance in early childhood and usually present with symptomatic diabetes in their late teens or early adulthood. They show increasing hyperglycaemia and treatment requirements with frequent microvascular complications. The underlying defect is progressive beta‐cell failure, with the early lesion characterized by failure to increase insulin secretion with increasing glucose levels. Patients with HNF4α and IPF1 mutations show a similar clinical picture to HNF1α although diabetes may be diagnosed later. There are other patients with MODY in whom the genetic defect is still unknown. Molecular genetic testing in patients with diabetes offers the possibility of making a firm diagnosis of MODY and allows prediction of the future clinical course. The role of predictive testing in non‐diabetic subjects within families is uncertain at present. Preliminary evidence suggests that maintaining insulin sensitivity by avoiding obesity and regular physical exercise may help delay the onset of diabetes © 1998 John Wiley & Sons, Ltd.