Research on the etiology and treatment of diabetes has made substantial progress. As a result, several new classes of anti-diabetic drugs have been introduced in clinical practice. Nonetheless, the number of patients achieving glycemic control targets has not increased for the past 20 years. Two areas of unmet medical need are the restoration of insulin sensitivity and the reversal of pancreatic beta cell failure. In this review, we integrate research advances in transcriptional regulation of insulin action and pathophysiology of beta cell dedifferentiation with their potential impact on prospects of a durable cure for patients suffering from type 2 diabetes.