Insulin resistance, defined as the inability of insulin to exert a normal biological action at the level of its target tissues, is one of the principal pathogenetic defects of type 2 diabetes. Metformin, the most widely-prescribed insulin-sensitizing agent in current clinical use, improves blood glucose control mainly by improving insulin-mediated suppression of hepatic glucose production, and by enhancing insulin-stimulated glucose disposal in skeletal muscle. Experimental studies show that metformin-mediated improvements in insulin sensitivity may be associated with several mechanisms, including increased insulin receptor tyrosine kinase activity, enhanced glycogen synthesis, and an increase in the recruitment and activity of GLUT4 glucose transporters. In adipose tissue, metformin promotes the re-esterification of free fatty acids and inhibits lipolysis, which may indirectly improve insulin sensitivity through reduced lipotoxicity. The improved glycaemia with metformin is not associated with increased circulating levels of insulin, and the risk of hypoglycaemia with metformin is minimal. The therapeutic profile of metformin supports its use for the control of blood glucose, in diabetic patients and for the prevention of diabetes in subjects with impaired glucose tolerance. Moreover, the improvement by metformin of cardiovascular risk factors associated with the dysmetabolic syndrome may account for the significant improvements in macrovascular outcomes observed in the UK Prospective Diabetes Study.