Metformin reduces the incidence of progression to type 2 diabetes in humans with obesity or impaired glucose tolerance. We used an animal model to investigate whether metformin could prevent acute lipid-induced insulin resistance and the mechanisms involved. Metformin or vehicle was administered to rats daily for 1 week. Rats were studied basally, after 3.75 h of intralipid-heparin or glycerol infusion, or after 5 h of infusion with a hyperinsulinemic-euglycemic clamp between 3 and 5 h. Metformin had no effect on plasma triacylglycerol or nonesterified fatty acid concentrations and did not alter glucose turnover or gluconeogenic enzyme mRNA after lipid infusion. However, metformin normalized hepatic glucose output and increased liver glycogen during lipid infusion and clamp. Basal liver (but not muscle or fat) AMP-activated protein kinase activity was increased by metformin (by 310%; P < 0.01), associated with increased phosphorylation of acetyl CoA carboxylase. Postclamp liver but not muscle phosphorylated/total Akt protein was increased, whereas basal c-Jun NH2-terminal kinase-1 and -2 protein expression were reduced (by 39 and 53%, respectively; P < 0.05). Metformin also increased hepatic basal IkappaBalpha levels (by 260%; P < 0.001) but had no effect on tyrosine phosphorylation or expression of insulin receptor substrate-1 (IRS-1). In summary, metformin opposes the development of acute lipid-induced insulin resistance in the liver through alterations in multiple signaling pathways.