The insulin gene is expressed almost exclusively in pancreatic β-cells. Metabolic regulation of insulin gene expression enables the β-cell to maintain adequate stores of intracellular insulin to sustain the secretory demand. Glucose is the major physiologic regulator of insulin gene expression; it coordinately controls the recruitment of transcription factors [e.g., pancreatic/duodenal homeobox-1 (PDX-1), mammalian homologue of avian MafA/L-Maf (MafA), Beta2/Neuro D (B2), the rate of transcription, and the stability of insulin mRNA. However, chronically elevated levels of glucose (glucotoxicity) and lipids (lipotoxicity) also contribute to the worsening of β-cell function in type 2 diabetes, in part via inhibition of insulin gene expression. The mechanisms of glucotoxicity, which involve decreased binding activities of PDX-1 and MafA and increased activity of C/EBPβ, are mediated by high-glucose -induced generation of oxidative stress. On the other hand, lipotoxicity is mediated by de novo ceramide synthesis and involves inhibition of PDX-1 nuclear translocation and MafA gene expression. Glucotoxicity and lipotoxicity have common targets, which makes their combination particularly harmful to insulin gene expression and β-cell function in type 2 diabetes.