ABSTRACT Current research on metabolic disorders such as type 2 diabetes relies on animal models because multi-organ diseases cannot be well studied with the standard in vitro assays. Here, we connect models of key metabolism organs, pancreas and liver, on a microfluidic chip to enable diabetes research in a human-based preclinical system. Aided by mechanistic mathematical modelling, we developed a two-organ microphysiological system (MPS) that replicates clinically-relevant phenotypes of diabetic dysregulation both in the liver and pancreas compartments. Exposure to hyperglycemia and high cortisone created a diseased pancreas-liver MPS which displayed beta-cell dysfunction, steatosis, elevated ketone-body secretion, increased glycogen storage, and upregulated gluconeogenic machinery. In turn, normoglycemia and physiological cortisone concentration maintained glucose tolerance and stable liver and beta-cell functions. This method was evaluated for repeatability in two laboratories and was effective in multiple pancreatic islet donors. The model also provides a platform to identify new therapeutic targets as demonstrated with a liver-secreted IL-1R2 protein that induced islet proliferation.