Diabetes Mellitus (DM) is a syndrome caused by various etiologies. The clinical manifestations of DM are not indicative of the cause of the disease, but might be indicative of the stage and severity of the disease process. Accurately diagnosing and classifying diabetic dogs and cats by the underlying disease process is essential for current and future studies on early detection, prevention, and treatment of underlying disease. Here, we review the current etiology-based classification of DM and definitions of DM types in human medicine and discuss key points on the pathogenesis of each DM type and prediabetes. We then review current evidence for application of this etiology-based classification scheme in dogs and cats. In dogs, we emphasize the lack of consistent evidence for autoimmune DM (Type 1) and the possible importance of other DM types such as DM associated with exocrine pancreatic disease. While most dogs are first examined because of DM in an insulin-dependent state, early and accurate diagnosis of the underlying disease process could change the long-term outcome and allow some degree of insulin independence. In cats, we review the appropriateness of using the umbrella term of Type 2 DM and differentiating it from DM secondary to other endocrine disease like hypersomatotropism. This differentiation could have crucial implications on treatment and prognosis. We also discuss the challenges in defining and diagnosing prediabetes in cats.