Amyloid formation is implicated in more than 20 human diseases, yet the mechanism by which fibrils form is not well understood. We use 2D infrared spectroscopy and isotope labeling to monitor the kinetics of fibril formation by human islet amyloid polypeptide (hIAPP or amylin) that is associated with type 2 diabetes. We find that an oligomeric intermediate forms during the lag phase with parallel β-sheet structure in a region that is ultimately a partially disordered loop in the fibril. We confirm the presence of this intermediate, using a set of homologous macrocyclic peptides designed to recognize β-sheets. Mutations and molecular dynamics simulations indicate that the intermediate is on pathway. Disrupting the oligomeric β-sheet to form the partially disordered loop of the fibrils creates a free energy barrier that is the origin of the lag phase during aggregation. These results help rationalize a wide range of previous fragment and mutation studies including mutations in other species that prevent the formation of amyloid plaques.