Diacylglycerol (DAG) is a lipid signal messenger and plays a physiological role in β-cells. Since defective glucose homeostasis increases de novo DAG synthesis, DAG may also contribute to β-cell dysfunction in type 2 diabetes. Although the primary function of DAG is to activate protein kinase C (PKC), the role of PKC in insulin secretion is controversial: PKC has been reported to act as both a positive and negative regulator of insulin secretion. In addition to the PKC pathway, DAG has also been shown to mediate other pathways such as the Munc-13-dependent pathway in β-cells. The intracellular levels of DAG are strictly regulated by diacylglycerol kinase (DGK); however, the role of DGK in β-cells and their involvement in β-cell failure in type 2 diabetes remain to be fully elucidated. We have recently reported the roles of type I DGK, DGKα and γ, in insulin secretion from β-cells. DGKα and γ were activated by glucose or high K(+) stimulation in β-cells, and the inhibition of the DGKs by a type I DGK inhibitor or by knockdown with small interfering RNA (siRNA) decreased insulin secretion. Thus, DGKα and γ are suggested to be activated in response to elevated [Ca(2+)]i in β-cells and to act as positive regulators of insulin secretion. In this article, we review the current understanding of the roles of DAG and DGK in β-cell function and their involvement in the development of β-cell dysfunction in type 2 diabetes.