If you have type 2 diabetes, you have insulin deficiency (your body makes too little insulin) and most likely insulin resistance (your body doesn't properly use the insulin it makes). Amazingly, as many as 92% of the people with type 2 diabetes have insulin resistance.
Normally, insulin is produced by the pancreas and it serves as the key that unlocks your body's cells to allow glucose in. However, if your cells are resistant to the effects of insulin, the pancreas will produce more and more in an effort to "force the lock." But no matter how much insulin is produced, your cells still can't use it well. Since the glucose in your blood isn't able to enter the cells, those cells begin to run out of energy. Eventually, the pancreas tires and loses its ability to produce enough insulin. At that point, glucose is locked out of the cells and getting higher by the minute in your blood.