Insulin, a hormone produced by pancreatic β-cells, has a primary function of maintaining glucose homeostasis. Deficiencies in β-cell insulin secretion result in the development of type 1 and type 2 diabetes, metabolic disorders characterized by high levels of blood glucose. Type 2 diabetes mellitus (T2DM) is characterized by the presence of peripheral insulin resistance in tissues such as skeletal muscle, adipose tissue and liver and develops when β-cells fail to compensate for the peripheral insulin resistance. Insulin resistance triggers a rise in insulin demand and leads to β-cell compensation by increasing both β-cell mass and insulin secretion and leads to the development of hyperinsulinemia. In a vicious cycle, hyperinsulinemia exacerbates the metabolic dysregulations that lead to β-cell failure and the development of T2DM. Insulin and IGF-1 signaling pathways play critical roles in maintaining the differentiated phenotype of β-cells. The autocrine actions of secreted insulin on β-cells is still controversial; work by us and others has shown positive and negative actions by insulin on β-cells. We discuss findings that support the concept of an autocrine action of secreted insulin on β-cells. The hypothesis of whether, during the development of T2DM, secreted insulin initially acts as a friend and contributes to β-cell compensation and then, at a later stage, becomes a foe and contributes to β-cell decompensation will be discussed.