The major focus of this Review is on the mechanisms of islet β cell failure in the pathogenesis of obesity-associated type 2 diabetes (T2D). As this demise occurs within the context of β cell compensation for insulin resistance, consideration is also given to the mechanisms involved in the compensation process, including mechanisms for expansion of β cell mass and for enhanced β cell performance. The importance of genetic, intrauterine, and environmental factors in the determination of “susceptible” islets and overall risk for T2D is reviewed. The likely mechanisms of β cell failure are discussed within the two broad categories: those with initiation and those with progression roles.