Type 2 diabetes mellitus (T2DM) is the most common human endocrine disease and is characterized by peripheral insulin resistance and pancreatic islet β-cell failure. Accumulating evidence indicates that mitochondrial dysfunction is a central contributor to β-cell failure in the evolution of T2DM. As reviewed elsewhere, reactive oxygen species (ROS) produced by β-cell mitochondria as a result of metabolic stress activate several stress-response pathways. This paper focuses on mechanisms whereby ROS affect mitochondrial structure and function and lead to β-cell failure. ROS activate UCP2, which results in proton leak across the mitochondrial inner membrane, and this leads to reduced β-cell ATP synthesis and content, which is a critical parameter in regulating glucose-stimulated insulin secretion. In addition, ROS oxidize polyunsaturated fatty acids in mitochondrial cardiolipin and other phospholipids, and this impairs membrane integrity and leads to cytochrome c release into cytosol and apoptosis. Group VIA phospholipase A₂ (iPLA₂β) appears to be a component of a mechanism for repairing mitochondrial phospholipids that contain oxidized fatty acid substituents, and genetic or acquired iPLA₂β-deficiency increases β-cell mitochondrial susceptibility to injury from ROS and predisposes to developing T2DM. Interventions that attenuate ROS effects on β-cell mitochondrial phospholipids might prevent or retard development of T2DM.