Recent studies ascribe a major role to pancreatic beta-cell loss in type 2 diabetes. We investigated the dynamics of beta-cell mass during diabetes evolution in Psammomys obesus, a model for nutrition-dependent type 2 diabetes, focusing on the very early and the advanced stages of the disease. P. obesus fed a high-calorie diet for 26 days developed severe hyperglycemia, beta-cell degranulation, and markedly reduced pancreatic insulin content. Reducing calories for 7 days induced normoglycemia in 90% of the animals, restoring beta-cell granulation and insulin content. To dissociate effects of diet from blood glucose reduction, diabetic animals received phlorizin for 2 days, which normalized glycemia and increased the pancreatic insulin reserve to 50% of control, despite a calorie-rich diet. During diabetes progression, beta-cell mass decreased initially but recovered spontaneously to control levels, despite persistent hyperglycemia. Strikingly, however, beta-cell mass did not correlate with degree of hyperglycemia or pancreatic insulin content. We conclude that reduced insulin reserve is the main cause of diabetes progression, whereas irreversible beta-cell mass reduction is a late event in P. obesus. The rapid recovery of the pancreas by phlorizin-induced normoglycemia implies a causal relationship between hyperglycemia and islet dysfunction. Similar mechanisms could be operative during the evolution of type 2 diabetes in humans.