Obesity-related type 2 diabetes develops in individuals with the onset of beta-cell dysfunction. Pancreatic islet lipotoxicity is now recognized as a primary reason for the onset and progression of the disease. Such dysfunction is reflected by the aberrant secretory capacity and detrimental loss of beta-cell mass and survival. Elevated circulating serum fatty acid levels and disordered lipid metabolism management are particularly interesting in the search for biologically relevant triggers of beta-cell demise. Herein, we review various types of toxic lipid metabolites that may play a significant role in pancreatic islet failure. The lipotoxic effect on beta-cells depends on the type of lipid mediator (e.g., long-chain fatty acids, diacylglycerols, ceramides, phospholipids), cellular location of its action (e.g., endoplasmic reticulum, mitochondria), and associated-organelle conditions (e.g., membranes, vesicles). We also discuss various aspects of lipid action in beta-cells, including effects on metabolic pathways, stress responses (e.g., oxidative stress, endoplasmic reticulum stress, and autophagy), and gene expression. (C) 2015 Elsevier Inc. All rights reserved.