Skeletal muscle insulin resistance is a key contributor to the pathophysiology of type 2 diabetes. Recent studies have shown that insulin resistance in a variety of conditions including type 2 diabetes, ageing and in offspring of type 2 diabetes is associated with muscle mitochondrial dysfunction. The important question is whether insulin resistance results from muscle mitochondrial dysfunction or vise versa. Gene array studies from muscle biopsy samples showed that transcript levels of several genes, especially OXPHOS genes are altered in type 2 diabetic patients during poor glycaemic control but many of these alterations are normalized by insulin treatment suggesting that reduced insulin action is a factor involved in muscle mitochondrial dysfunction. Moreover, insulin infusion while maintaining glucose and amino acid levels results in increase in muscle mitochondrial gene transcript levels and ATP production indicating that insulin is a key regulator of muscle mitochondrial biogenesis. At a similar post-absorptive insulin levels both type 2 diabetic patients and non diabetic controls have similar muscle mitochondrial ATP production but increasing insulin from low to high levels stimulate ATP production only in non diabetic people but not in the diabetic people. The lack of muscle mitochondrial response to insulin in type 2 diabetic patients is likely to be related to insulin resistance and reduced substrate utilization.