Type 2 diabetes mellitus is characterized by insulin resistance and failure of pancreatic beta-cells producing insulin. Autophagy plays a crucial role in cellular homeostasis through degradation and recycling of organelles such as mitochondria or endoplasmic reticulum (ER). Here we discussed the role of beta-cell autophagy in development of diabetes, based on our own studies using mice with beta-cell-specific deletion of Atg7 (autophagy-related 7), an important autophagy gene, and studies by others. beta-cell-specific Atg7-null mice showed reduction in beta-cell mass and pancreatic insulin content. Insulin secretory function ex vivo was also impaired, which might be related to organelle dysfunction associated with autophagy deficiency. As a result, beta-cell-specific Atg7-null mice showed hypoinsulinemia and hyperglycemia. However, diabetes never developed in those mice. Obesity and/or lipid are physiological ER stresses that can precipitate beta-cell dysfunction. Our recent studies showed that beta-cell-specific Atg7-null mice, when bred with ob/ob mice, indeed become diabetic. Thus, autophagy deficiency in beta-cells could be a precipitating factor in the progression from obesity to diabetes due to inappropriate response to obesity-induced ER stress.