Many clinical treatment studies have reported remarkable interindividual variability in the response to pharmaceutical drugs, and uncovered the existence of inadequate treatment response, non-response, and even adverse drug reactions. Pharmacogenetics addresses the impact of genetic variants on treatment outcome including side-effects. In recent years, it has also entered the field of clinical diabetes research. In modern type 2 diabetes therapy, metformin is established as first-line drug. The latest pharmaceutical developments, including incretin mimetics, dipeptidyl peptidase 4 inhibitors (gliptins), and sodium/glucose cotransporter 2 inhibitors (gliflozins), are currently experiencing a marked increase in clinical use, while the prescriptions of α-glucosidase inhibitors, sulfonylureas, meglitinides (glinides), and thiazolidinediones (glitazones) are declining, predominantly because of reported side-effects. This review summarizes the current knowledge about gene-drug interactions observed in therapy studies with the above drugs. We report drug interactions with candidate genes involved in the pharmacokinetics (e.g., drug transporters) and pharmacodynamics (drug targets and downstream signaling steps) of the drugs, with known type 2 diabetes risk genes and previously unknown genes derived from hypothesis-free approaches such as genomewide association studies. Moreover, some new and promising candidate genes for future pharmacogenetic assessment are highlighted. Finally, we critically appraise the current state of type 2 diabetes pharmacogenetics in the light of its impact on therapeutic decisions, and we refer to major problems, and make suggestions for future efforts in this field to help improve the clinical relevance of the results, and to establish genetically determined treatment failure.