This failure to function properly affectsthe liver synthesis and secretion of large amounts of glucose (blood sugar) when blood sugar is already high, pancreatic beta cells fail to boost their insulin output appropriately in response to the blood sugar rise following a meal, skeletal muscle does an inefficient job of storing blood sugar after a meal, and fat cells continually spew out large amounts of fats, in defiance of the "stop" signal transmitted by insulin. As a result, blood sugar levels are constantly elevated, as are the blood fats that help to promote and maintain these metabolic malfunctions. Diabetics find themselves trapped in a vicious cycle in which ineffective insulin function results in continual overexposure of the body’s tissues to both glucose and fat - a situation known formally as "glucolipotoxicity" - which in turn maintains the failure of insulin function!

A fundamental problem in type 2 diabetes, and one that usually predates by years the hyperglycemia that is the hallmark of diabetes, is insulin resistance. This refers to the failure of certain tissues, like skeletal muscle, fat cells, and the liver, to respond efficiently to the rise in insulin evoked by meals. Skeletal muscle is chiefly responsible for storing the excess sugar (glucose) in the blood that is generated when carbohydrate is digested. A failure of muscle to store meal-derived glucose rapidly leads to inappropriately high and sustained elevations of blood glucose following meals. This is a phenomenon known as glucose intolerance. Insulin resistance tends to promote glucose intolerance, since insulin functions to boost the capacity of muscle to store glucose.

Many people whose muscles are insulin resistant are not glucose intolerant. Their pancreatic beta cells adapt by producing increasing amounts of insulin in responses to meals (called adaptive hyperinsulinemia). In other words, increased blood levels of insulin are able to compensate for the insensitivity of muscle and other tissues to this hormone, such that blood sugar storage following meals remains normal, or nearly so.