Type 2 diabetes is a genetically heterogeneous disease, with several relatively rare monogenic forms and a number of more common forms resulting from a complex interaction of genetic and environmental factors. Previous studies using a candidate gene approach, family linkage studies, and gene expression profiling uncovered a number of type 2 genes, but the genetic basis of common type 2 diabetes remained unknown. Recently, a new window has opened on defining potential type 2 diabetes genes through genome-wide SNP association studies of very large populations of individuals with diabetes. This review explores the pathway leading to discovery of these genetic effects, the impact of these genetic loci on diabetes risk, the potential mechanisms of action of the genes to alter glucose homeostasis, and the limitations of these studies in defining the role of genetics in this important disease.