Type 2 diabetes (T2D) 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 pathogenesis of T2D. This review focuses on mechanisms whereby reactive oxygen species (ROS) produced by β-cell in response to metabolic stress affect mitochondrial structure and function and lead to β-cell failure. Specifically, ROS oxidize mitochondrial membrane phospholipids such as cardiolipin, which impairs membrane integrity and leads to cytochrome c release and apoptosis. In addition, ROS activate UCP2 via peroxidation of the mitochondrial membrane phospholipids, which results in proton leak leading to reduced ATP synthesis and content in β-cells - critical parameters in the regulation of glucose-stimulated insulin secretion. 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 development of T2D. Interventions that attenuate the adverse effects of ROS on β-cell mitochondrial phospholipids may prevent or retard the development of T2D.