Insulin receptor substrate (IRS) proteins mediate a variety of the metabolic and growth-promoting actions of insulin and IGF-1. After phosphorylation by activated receptors, these intracellular signaling molecules recruit various downstream effector pathways including phosphatidylinositol 3-kinase and Grb2. Ablation of the IRS-2 gene produces a diabetic phenotype; mice lacking IRS-2 display peripheral insulin resistance and beta-cell dysfunction characterized by a 50% reduction in beta-cell mass. In contrast, deletion of IRS-1 retards somatic growth and enhances beta-cell mass. IRS1-/- mice are 50% smaller than controls but have a twofold increase in pancreatic beta-cell mass. Thus, observations from these recently developed animal models implicate the IRS signaling systems in the response of classical insulin target tissues, and they suggest a critical role for these proteins in the regulation of beta-cell function. In humans, type 2 diabetes generally occurs when insulin-secretory reserves fail to compensate for peripheral insulin resistance. Study and identification of the signals downstream of IRS proteins in beta-cells may provide unique insights into the compensatory mechanisms by which these cells respond to insulin resistance. Therefore, the intent of this review is to summarize recent observations regarding the regulation of beta-cell function by members of the IRS protein family.