The current study addresses a novel hypothesis of subcellular distribution of mitochondrial dysfunction in skeletal muscle in type 2 diabetes. Vastus lateralis muscle was obtained by percutaneous biopsy from 11 volunteers with type 2 diabetes; 12 age-, sex-, and weight-matched obese sedentary nondiabetic volunteers; and 8 lean volunteers. Subsarcolemmal and intermyofibrillar mitochondrial fractions were isolated by differential centrifugation and digestion techniques. Overall electron transport chain activity was similar in type 2 diabetic and obese subjects, but subsarcolemmal mitochondria electron transport chain activity was reduced in type 2 diabetic subjects (0.017 +/- 0.003 vs. 0.034 +/- 0.007 units/mU creatine kinase [CK], P = 0.01) and sevenfold reduced compared with lean subjects (P < 0.01). Electron transport chain activity in intermyofibrillar mitochondria was similar in type 2 diabetic and obese subjects, though reduced compared with lean subjects. A reduction in subsarcolemmal mitochondria was confirmed by transmission electron microscopy. Although mtDNA was lower in type 2 diabetic and obese subjects, the decrement in electron transport chain activity was proportionately greater, indicating functional impairment. Because of the potential importance of subsarcolemmal mitochondria for signal transduction and substrate transport, this deficit may contribute to the pathogenesis of muscle insulin resistance in type 2 diabetes.