I posted a shorter version of this explanation of the difference between Type I and II diabetes on Paleohacks and thought it might be of more general interest.
Technically, diabetes mellitus is just hyperglycemia (High blood glucose) that spills into the urine if it gets high enough - that was how it was originally diagnosed.
Type I and II are actually completely different diseases that just both have the common end result of hyperglycemia - high serum blood glucose or high "blood sugar".
I consider both types of DM to be diseases of civilization related to the neolithic agents.
Type II diabetes is a late consequence of the metabolic syndrome where the primary defect is in the liver - likely due to the neolithic agents fructose and n-6 PUFA injuring the liver and causing both liver and systemic inflammation.
Impaired insulin sensitivity in the liver means the pancreas must secrete more insulin to communicate with the liver (control blood sugar, etc) - peripheral insulin resistance follows, likely as a defensive response to hyperinsulinemia and hyperglycemia (hyperglycemia that the pancreas has trouble controlling despite increased insulin secretion). So initially, in Type II there is more hyperinsulinemia than hyperglycemia. This the reason why by the time Type II is diagnosed, so much damage is already done. Not only is the threshhold for fasting BG too high, the post meal spikes are not tested for routinely and the high insulin levels are flying completely beneath the radar.
Ultimately, the hyperinsulinemia cannot keep up with the hyperglycemia, and when serum BG gets high enough, you get diabetes. The beta cells that make insulin fail, and in fact one of the things that damages them is hyperglycemia itself which is toxic to the beta cell. So you get B cell damage/death in type II eventually as well.
Type I diabetes and LADA (Late onset autoimmune diabetes) or type 1.5 have autoimmune destructon of the islet islet B cells that make insulin. Insulin sensitivity is usually normal.
Relevant to the theme of this blog, you should know that Type I DM is an order of magnitude more common in those with celiac disease and is more common in those with other autoimmune disorders like Hashimoto's thyroiditis, etc. Type I DM is an autoimmune disease that usually has onset in childhood. I believe it relates to leaky gut - with foreign proteins or peptides inducing an immune response via molecular mimicry in the context of an immune system that is likely impaired by excess n-6 linoleic acid and consequent 6:3 imbalance.
In type I DM, the initial damage is caused by the hyperglyemia - excess glycation leads to kidney, nerve and eye damage and inflammation, etc. Later, the damage is also caused by the excess injected insulin required when the patient is put on the ADA diet and the spikes in glucose that inevitably occur due to the inherent lack of precision of injected insulin. As an alternative to the insanity of the ADA, this can be minimized with VLC - a fatty acid/ketone -based metabolim that requires just enough insulin just to tell the liver to hang on the glycogen stores and facilitiate peripheral uptake, not the massive doses of insulin required to compensate for 6 times a day tsunamis of glucose arriving from the gut to keep the glucose from putting you in a coma.
In type II, the initial damage can be thought of as prior to both the hyperglycemia and the the hyperinsulinemia. The initial damage is the suite of early metabolic defects like liver inflammation, steatosis (fatty liver), elevated inflammatory cytokines like IL-6 and TNF-a and likely systemic inflammatory and immune effects that contribute to cancer and immune disorders and atherosclerosis - (you can have these effects as well even if you never develop diabetes and are thin and apparently healthy on the SAD).
Then, when the pancreas is pumping insulin like mad to control BG in the face of liver and increasingly, peripheral, insulin resistance, we are now adding the bad effects of hyperinsulinemia like promotion of more atherosclerosis, degenerative diseases like osteoarthritis, tumor promotion, etc.,etc. Once the pancreas fails, we add the effects of hyperglycemia - the same ones that a Type I can get, like neuropathy, cataracts, damage to the kidneys, and yet more additive effects on inflammation, glycation with increased tissue stiffness, more atherosclerosis and thrombogenesis, etc.
Finally, if you are treated with the ADA diet as a type II, your sBG may be brought under control, but often only at the expense of treating you with EVEN MORE OF THE SAME INSULIN that is causing about half the damage in the first place.
This is the best explanation for the failure of trials of tight glycemic control to show mortality benefits. They do it with drugs that are hepato- or cardio- toxic or with supra-physiologic doses of INSULIN and not by simply having you eat less of the glucose in the first place. The point being, it does you little good to decrease the damage from glucose if you balance with more damage caused by exogenous insulin.
In my opinion, Type II diabetes can actually be cured if it is caught and treated before there is too much beta cell destruction or burn-out. If one fixes the diet and allows enough time for the primary defect in liver sensitivity (and liver inflammation, NAFLD, etc) to heal, this metabolic defect should be reversible. Even if some damage has been done, one can usually avoid medication and especially insulin by lowering carbs to whatever it takes to allow your pancreas to just be occupied with "talking to your liver"
I am aware of at least one young woman who had type I DM diagnosed, and eating a paleo diet, the autoimmune reaction was arrested and she now no longer has diabetes. Usually type I is not diagnosed early enough for this to happen, but it could (and in the one case I am aware of did) reverse if caught right away and treated with a paleo diet
So - Type I low insulin - high sBG - normal insulin sensitivity - can't be cured usually. VLC paleo is the treatment of choice as it allows more stable BG with less exogenous insulin.
Type II - late effect of metabolic syndrome - damage if treated via ADA principles is as much due to hyperinsulinemia as hyperglycemia. Can often be essentially cured with diet. If caught early enough, you are cured if your liver heals and the pancreas recovers or is not that damaged. If caught later and the metabolism remains broken or pancreas is irreversibly burnt out, then VLC PaNu (Bernstein level of carbs or lower) is the treatment of choice
Hat Tip to Peter for the "talking to your liver" metaphor.