Intrauterine growth retardation (IUGR) has been linked to the development of type 2 diabetes in later life. We have developed a model of uteroplacental insufficiency, a common cause of intrauterine growth retardation, in the rat. Early in life, the animals are insulin resistant and by 6 mo of age they develop diabetes. Glycogen content and insulin-stimulated 2-deoxyglucose uptake were significantly decreased in muscle from IUGR rats. IUGR muscle mitochondria exhibited significantly decreased rates of state 3 oxygen consumption with pyruvate, glutamate, alpha-ketoglutarate, and succinate. Decreased pyruvate oxidation in IUGR mitochondria was associated with decreased ATP production, decreased pyruvate dehydrogenase activity, and increased expression of pyruvate dehydrogenase kinase 4. Such a defect in IUGR mitochondria leads to a chronic reduction in the supply of ATP available from oxidative phosphorylation. Impaired ATP synthesis in muscle compromises energy-dependent GLUT4 recruitment to the cell surface, glucose transport, and glycogen synthesis, which contribute to insulin resistance and hyperglycemia of type 2 diabetes.