The pathophysiology of type 2 diabetes mellitus (DM) is varied and complex. However, the association of DM with obesity and inactivity indicates an important, and potentially pathogenic, link between fuel and energy homeostasis and the emergence of metabolic disease. Given the central role for mitochondria in fuel utilization and energy production, disordered mitochondrial function at the cellular level can impact whole-body metabolic homeostasis. Thus, the hypothesis that defective or insufficient mitochondrial function might play a potentially pathogenic role in mediating risk of type 2 DM has emerged in recent years. Here, we summarize current literature on risk factors for diabetes pathogenesis, on the specific role(s) of mitochondria in tissues involved in its pathophysiology, and on evidence pointing to alterations in mitochondrial function in these tissues that could contribute to the development of DM. We also review literature on metabolic phenotypes of existing animal models of impaired mitochondrial function. We conclude that, whereas the association between impaired mitochondrial function and DM is strong, a causal pathogenic relationship remains uncertain. However, we hypothesize that genetically determined and/or inactivity-mediated alterations in mitochondrial oxidative activity may directly impact adaptive responses to overnutrition, causing an imbalance between oxidative activity and nutrient load. This imbalance may lead in turn to chronic accumulation of lipid oxidative metabolites that can mediate insulin resistance and secretory dysfunction. More refined experimental strategies that accurately mimic potential reductions in mitochondrial functional capacity in humans at risk for diabetes will be required to determine the potential pathogenic role in human insulin resistance and type 2 DM.