Pancreatic β-cell dysfunction and insulin resistance are two of the major causes of type 2 diabetes (T2D). Recent clinical and experimental studies have suggested that the functional capacity of β-cells, particularly in the first phase of insulin secretion, is a primary contributor to the progression of T2D and its associated complications. Pancreatic β-cells undergo dynamic compensation and decompensation processes during the development of T2D, in which metabolic stresses such as endoplasmic reticulum stress, oxidative stress, and inflammatory signals are key regulators of β-cell dynamics. Dietary and exercise interventions have been shown to be effective approaches for the treatment of obesity and T2D, especially in the early stages. Whilst the targeted tissues and underlying mechanisms of dietary and exercise interventions remain somewhat vague, accumulating evidence has implicated the improvement of β-cell functional capacity. In this review, we summarize recent advances in the understanding of the dynamic adaptations of β-cell function in T2D progression and clarify the effects and mechanisms of dietary and exercise interventions on β-cell dysfunction in T2D. This review provides molecular insights into the therapeutic effects of dietary and exercise interventions on T2D, and more importantly, it paves the way for future research on the related underlying mechanisms for developing precision prevention and treatment of T2D.