The pathogenesis of non-insulin-dependent diabetes mellitus (NIDDM) involves complex interactions between multiple physiological defects, both genetic and acquired. The application of transgenic technology to create animal models that address questions concerning NIDDM (and obesity) is a very recent development that is now gaining rapid momentum and receiving deserved attention. In general, transgenic methods afford new opportunities to alter the site or level of expression of functional genes in vivo, to transfer novel foreign genes into animals, to prevent the expression of specific genes, or to replace genes with specific genetic variants. Two general approaches can be applied: 1) conventional transgenics, the transfer to and expression of new genetic information in animals; and 2) gene targeting, the disruption or replacement of specific endogenous genes. Recent transgenic initiatives have provided important insights into 1) the mechanism of glucose-stimulated insulin secretion and the role of potential defects in this system, 2) the regulated expression of genes that control hepatic glucose production, 3) the role of specific molecules that mediate the actions of insulin, and 4) the elucidation of factors that contribute to in vivo regulation of energy balance and body composition. Emerging transgenic strategies should have a dramatic impact on future efforts to assess the function of newly identified molecules implicated in the regulation of in vivo glucose homeostasis and to determine the roles of candidate loci or specific mutations uncovered during the search for new NIDDM susceptibility genes.