About 30% of patients with cirrhosis have diabetes mellitus (DM). Nowadays, it is a matter for debate whether type 2 DM in the absence of obesity and hypertriglyceridemia may be a risk factor for chronic liver disease. DM, which develops as a complication of cirrhosis, is known as "hepatogenous diabetes". Insulin resistance in muscular and adipose tissues and hyperinsulinemia seem to be the pathophysiologic bases of diabetes in liver disease. An impaired response of the islet beta-cells of the pancreas and hepatic insulin resistance are also contributory factors. Non-alcoholic fatty liver disease, alcoholic cirrhosis, chronic hepatitis C (CHC) and hemochromatosis are more frequently associated with DM. Insulin resistance increases the failure of the response to treatment in patients with CHC and enhances progression of fibrosis. DM in cirrhotic patients may be subclinical. Hepatogenous diabetes is clinically different from that of type 2 DM, since it is less frequently associated with microangiopathy and patients more frequently suffer complications of cirrhosis. DM increases the mortality of cirrhotic patients. Treatment of the diabetes is complex due to liver damage and hepatotoxicity of oral hypoglycemic drugs. This manuscript will review evidence that exists in relation to: type 2 DM alone or as part of the metabolic syndrome in the development of liver disease; factors involved in the genesis of hepatogenous diabetes; the impact of DM on the clinical outcome of liver disease; the management of DM in cirrhotic patients and the role of DM as a risk factor for the occurrence and exacerbation of hepatocellular carcinoma.