Type 2 diabetes mellitus (T2DM) is an increasingly prevalent multifactorial disease that has both genetic and environmental risk factors, resulting in impaired glucose homeostasis. Genome-wide association studies (GWAS) have identified over 400 genetic signals that are associated with altered risk of T2DM. Human physiology and epigenomic data support a central role for the pancreatic islet in the pathogenesis of T2DM. This Review focuses on the promises and challenges of moving from genetic associations to molecular mechanisms and highlights efforts to identify the causal variant and effector transcripts at T2DM GWAS susceptibility loci. In addition, we examine current human models that are used to study both β-cell development and function, including EndoC-β cell lines and human induced pluripotent stem cell-derived β-like cells. We use examples of four T2DM susceptibility loci (CDKAL1, MTNR1B, SLC30A8 and PAM) to emphasize how a holistic approach involving genetics, physiology, and cellular and developmental biology can disentangle disease mechanisms at T2DM GWAS signals.