The pancreas is the organ in the body that makes insulin. People with diabetes do not have enough insulin, and blood sugars rise. As a general rule, the pancreas is not able to make any insulin in type 1 diabetes (insulin-requiring diabetes); in type 2 diabetes (diabetes that is not usually treated with insulin), the pancreas either makes some insulin (but not enough) or it makes enough insulin, but the body cannot respond (is resistant) to the effects of insulin.
There are exceptions to these generalizations. People with type 1 diabetes (insulin-requiring diabetes) sometimes continue to make insulin for a little while after the diabetes first develops (a time commonly known as the "honeymoon period"). Some with type 2 diabetes (non-insulin-requiring diabetes) also stop making insulin after a while and require insulin injections, just like a person with type 1 diabetes.
In general, children usually have type 1 diabetes (insulin-requiring diabetes), although type 2 (non-insulin-requiring diabetes) is becoming more common in the younger age groups.