Insulin resistance is a major factor in the pathogenesis of type 2 diabetes in the elderly. To investigate how insulin resistance arises, we studied healthy, lean, elderly and young participants matched for lean body mass and fat mass. Elderly study participants were markedly insulin-resistant as compared with young controls, and this resistance was attributable to reduced insulin-stimulated muscle glucose metabolism. These changes were associated with increased fat accumulation in muscle and liver tissue assessed by 1H nuclear magnetic resonance (NMR) spectroscopy, and with a approximately 40% reduction in mitochondrial oxidative and phosphorylation activity, as assessed by in vivo 13C/31P NMR spectroscopy. These data support the hypothesis that an age-associated decline in mitochondrial function contributes to insulin resistance in the elderly.