Type 2 diabetes is characterized by insulin resistance and progressive β-cell failure. Deficient insulin secretion, with increased proportions of insulin precursor molecules, is a common feature of type 2 diabetes; this could result from inappropriate β-cell function and/or reduced β-cell mass. Most studies using tissues from diabetic patients are retrospective, providing only limited information on the relative contribution of β-cell dysfunction versus decreased β-cell mass to the “β-cell failure” of type 2 diabetes. The gerbil Psammomys obesus is a good model to address questions related to the role of insulin resistance and β-cell failure in nutritionally induced diabetes. Upon a change from its natural low-calorie diet to the calorie-rich laboratory food, P. obesus develops moderate obesity associated with postprandial hyperglycemia. Continued dietary load, superimposed on its innate insulin resistance, results in depletion of pancreatic insulin stores, with increased proportions of insulin precursor molecules in the pancreas and the blood. Inadequate response of the preproinsulin gene to the increased insulin needs is an important cause of diabetes progression. Changes in β-cell mass do not correlate with pancreatic insulin stores and are unlikely to play a role in disease initiation and progression. The major culprit is the inappropriate insulin production with depletion of insulin stores as a consequence. Similar mechanisms could operate during the evolution of type 2 diabetes in humans.