BACKGROUND The metabolic effects and mechanism of action of metformin are still poorly understood, despite the fact that it has been used to treat patients with non-insulin-dependent diabetes mellitus (NIDDM) for more than 30 years. METHODS In 10 obese patients with NIDDM, we used a combination of isotope dilution, indirect calorimetry, bioimpedance, and tissue-balance techniques to assess the effects of metformin on systemic lactate, glucose, and free-fatty-acid turnover; lactate oxidation and the conversion of lactate to glucose; skeletal-muscle glucose and lactate metabolism; body composition; and energy expenditure before and after four months of treatment. RESULTS Metformin treatment decreased the mean (+/- SD) glycosylated hemoglobin value from 13.2 +/- 2.2 percent to 10.5 +/- 1.6 percent (P < 0.001) and reduced fasting plasma glucose concentrations from 220 +/- 41 to 155 +/- 28 mg per deciliter (12.2 +/- 0.7 to 8.6 +/- 0.5 mmol per liter) (P < 0.001). Although resting energy expenditure did not change, the patients lost 2.7 +/- 1.3 kg of weight (P < 0.001), 88 percent of which was adipose tissue. The mean (+/- SE) rate of plasma glucose turnover (hepatic glucose output and systemic glucose disposal) decreased from 2.8 +/- 0.2 to 2.0 +/- 0.2 mg per kilogram of body weight per minute (15.3 +/- 0.9 to 10.8 +/- 0.9 mumol per kilogram per minute) (P < 0.001), as a result of a decrease in hepatic glucose output; systemic glucose clearance did not change. The rate of conversion of lactate to glucose (gluconeogenesis) decreased by 37 percent (P < 0.001), whereas lactate oxidation increased by 25 percent (P < 0.001). There were no changes in the plasma lactate concentration, plasma lactate turnover, muscle lactate release, plasma free-fatty-acid turnover, or uptake of glucose by muscle. CONCLUSIONS Metformin acts primarily by decreasing hepatic glucose output, largely by inhibiting gluconeogenesis. It also seems to induce weight loss, preferentially involving adipose tissue.