The aim of this review is to provide a comprehensive summary of the subject of glucose metabolism in normal and obese subjects, and in those with type 2 diabetes. The following topics are discussed: Glucose and insulin metabolism, including characterization of the role of various organs in maintaining glucose homeostasis in the basal state and after food. The action of insulin and the concept of insulin resistance, its main characteristics as revealed by studies of glucose metabolism in liver and skeletal muscle, the two organs primarily involved. Changes in insulin secretion in obese subjects and in diabetics are reviewed. Finally, the development of diabetes as a consequence of increasing insulin resistance in the obese diabetic subject is discussed. The principal features--insulin resistance, elevated free fatty acid levels and glucotoxicity--are emphasized. A possible explanation of how obesity leads to diabetes, emphasizing the role played by upper body fat distribution, is provided.