Type 1 diabetes (with predominant insulin deficiency) was until recently assumed to be the diagnosis of almost all children presenting with glucose intolerance. This requires insulin treatment via subcutaneous injections, and most patients develop microvascular and macrovascular complications in adulthood. Advances in genetics in the 1990s identified a group of genetic disorders of pancreatic beta-cell function (maturity-onset diabetes of the young) for which the outlook is better than type 1, genetic testing is available, and oral medication is the preferred treatment. In 2000, the first cases of type 2 diabetes (predominant insulin resistance) were reported in UK children, reflecting a trend seen in North America over the last 20 years. Affected children are usually overweight or obese, often female, pubertal, predominantly of ethnic minority (South Asian) origin and have a family history of type 2 diabetes. The diagnosis is aided by demonstration of insulin resistance, and may include measurement of fasting insulin and C-peptide, markers of the metabolic syndrome (fasting lipids, sex hormone binding globulin) and absence of autoantibodies against beta-cell components (e.g. glutamic acid decarboxylase). Management is aimed towards weight stabilization in the growing child, education on healthy lifestyles and the treatment of hyperglycaemia with both insulin and insulin-sensitizing agents. The underlying cause of type 2 diabetes in children is likely to be related to the epidemic of childhood obesity. There is emerging evidence of an appalling outlook for these young people in terms of miscarriages and microvascular and cardiovascular complications, which are likely to present an enormous economic and health services burden over the next 20 years.