The hyperglycaemia of NIDDM is associated with insulin resistance due, in part, to reduced insulin receptor binding and more especially postreceptor defects. Metformin is an antihyperglycaemic agent which can be used to ameliorate insulin resistance. It appears to act directly on insulin target cells to enhance insulin action. Although metformin may increase insulin-receptor binding, its main effect appears to be directed at the postreceptor level of insulin action. Accordingly the drug potentiates insulin-suppression of hepatic gluconeogenesis and increases insulin-mediated peripheral glucose uptake and metabolism. It does not stimulate insulin release, does not cause weight gain and does not cause clinical hypoglycaemia. The risk of lactate accumulation should be appreciated in patients with renal insufficiency, liver dysfunction and following acute illness with hypoxia, when therapy should be stopped. Although metformin is often bracketed with phenformin in the context of lactic acidosis, different pharmacodynamics and adherence to prescribing guidelines render such a comparison unwarranted.