Both insulin resistance and beta-cell dysfunction occur during the development of non-insulin-dependent diabetes mellitus (NIDDM), but controversy exists about which lesion is primary. Based on longitudinal studies in the Pima Indians, a population with the world's highest reported prevalence of NIDDM, a two-step model for development of the disease is proposed. The first step is transition from normal to impaired glucose tolerance, for which insulin resistance is the main determinant, and the second and later step is worsening from impaired glucose tolerance to diabetes, in which beta-cell dysfunction plays a critical role. This hypothesis is consistent with findings from other ethnic groups from many parts of the world.