Metformin decreases endogenous glucose production by the liver. Few studies have examined the effect of metformin on the insulin-signaling pathway in liver models, and none have presented data on the effect in normal human liver. Huh7 human hepatoma cells and primary human hepatocytes were used. Insulin receptor (IR) and IR substrates (IRS)-1 and -2 were assessed by immunoprecipitation and immunoblot. Normal human liver was used to assay IR kinase activity (IR-KA). Tyrphostin AG1024 was used to inhibit IR-KA and examine effects on deoxyglucose uptake. Metformin (1 micro g/ml) increased IR tyrosine phosphorylation by 78% (P = 0.0007) in 30 min in human hepatocytes and Huh7 cells and increased IRS-2 but not IRS-1 activation, and the downstream increase in deoxyglucose uptake was mediated via increased translocation of GLUT-1 to the plasma membrane. Metformin did not augment maximal or submaximal insulin-stimulated IR activation. Metformin increased basal IR-KA by 150% (P = 0.0001). AG1024 inhibited metformin-induced IR-beta phosphorylation in a concentration-dependent manner and abolished metformin-induced 2-deoxyglucose uptake. This study demonstrates that the mechanism of action of metformin in liver involves IR activation, followed by selective IRS-2 activation, and increased glucose uptake via increased GLUT-1 translocation. The effect of metformin was completely blocked by an IR inhibitor.