Faced with a global epidemic of type 2 diabetes (T2D), it is critical that researchers improve our understanding of the pathogenesis of T2D and related vascular complications. These findings may ultimately lead to novel treatment options for disease prevention or delaying progression. Two major paradigms jointly underlie the development of T2D and related coronary artery disease, diabetic nephropathy, and diabetic retinopathy. These paradigms include the genetic risk variants and behavioral/environmental factors. This article systematically reviews the literature supporting genetic determinants in the pathogenesis of T2D and diabetic vasculopathy, and the functional implications of these gene variants on the regulation of beta-cell function and glucose homeostasis. We update the discovery of diabetes and diabetic vasculopathy risk variants, and describe the genetic technologies that have uncovered them. Also, genomic linkage between obesity and T2D is discussed. There is a complementary role for behavioral and environmental factors modulating the genetic susceptibility and diabetes risk. Epidemiological and clinical data demonstrating the effects of behavioral and novel environmental exposures on disease expression are reviewed. Finally, a succinct overview of recent landmark clinical trials addressing glycemic control and its impact on rates of vascular complications is presented. It is expected that novel strategies to exploit the gene- and exposure-related underpinnings of T2D will soon result.