Islet amyloid polypeptide (IAPP, or amylin) is one of the major secretory products of β-cells of the pancreatic islets of Langerhans. It is a regulatory peptide with putative function both locally in the islets, where it inhibits insulin and glucagon secretion, and at distant targets. It has binding sites in the brain, possibly contributing also to satiety regulation and inhibits gastric emptying. Effects on several other organs have also been described. IAPP was discovered through its ability to aggregate into pancreatic islet amyloid deposits, which are seen particularly in association with type 2 diabetes in humans and with diabetes in a few other mammalian species, especially monkeys and cats. Aggregated IAPP has cytotoxic properties and is believed to be of critical importance for the loss of β-cells in type 2 diabetes and also in pancreatic islets transplanted into individuals with type 1 diabetes. This review deals both with physiological aspects of IAPP and with the pathophysiological role of aggregated forms of IAPP, including mechanisms whereby human IAPP forms toxic aggregates and amyloid fibrils.