To establish the antihyperglycemic mechanisms of metformin in non-insulin-dependent diabetes mellitus (NIDDM) independently of the long-term, aspecific effects of removal of glucotoxicity, 21 NIDDM subjects (14 obese, 7 nonobese) were studied on two separate occasions, with an isoglycemic (plasma glucose ∼9 mM) hyperinsulinemic (two-step insulin infusion, 2 h each, at the rate of 4 and 40 mU · m−2 · min−1) clamp combined with [3−3H]glucose infusion and indirect calorimetry, after administration of either metformin (500 mg per os, at –5 and –1 h before the clamp) or placebo. Compared with placebo, hepatic glucose production (HGP) decreased ∼30% more after metformin (from 469 ± 50 to 330 ± 54 μmol/min), but glucose uptake did not increase. Metformin suppressed free fatty acids (FFAs) by ∼17% (from 0.42 ± 0.04 to 0.35 ± 0.04 mM) and lipid oxidation by ∼25% (from 4.5 ± 0.4 to 3.4 ± 0.4 μmol · kg−1 · min−1) and increased glucose oxidation by ∼ 16% (from 16.2 ± 1.4 to 19.3 ± 1.3 μmol.kg−1 · min−1) compared with placebo (P < 0.05), but did not affect nonoxidative glucose metabolism, protein oxidation, or total energy expenditure. Suppression of FFA and lipid oxidation after metformin correlated with suppression of HGP (r = 0.70 and r = 0.51, P < 0.001). The effects of metformin in obese and nonobese subjects were no different. We conclude that the specific, antihyperglycemic effects of metformin in the clinical condition of hyperglycemia in NIDDM are primarily due to suppression of HGP, not stimulation of glucose uptake, and are mediated, at least in part, by suppression of FFA and lipid oxidation.