The growing incidence of prediabetes and clinical type 2 diabetes, in part characterised by insulin resistance, is a critical health problem with consequent devastating personal and health-care costs. Vitamin D status, assessed by serum 25-hydroxyvitamin D levels, is inversely associated with diabetes in epidemiological studies. Several clinical intervention studies also support that vitamin D, or its active metabolite 1,25-dihydroxyvitamin D (1,25(OH)2D), improves insulin sensitivity, even in subjects with glucose metabolism parameters classified within normal ranges. The mechanisms proposed which may underlie this effect include potential relationships with improvements in lean mass, regulation of insulin release, altered insulin receptor expression and specific effects on insulin action. These actions may be mediated by systemic or local production of 1,25(OH)2D or by suppression of parathyroid hormone, which may function to negatively affect insulin sensitivity. Thus, substantial evidence supports a relationship between vitamin D status and insulin sensitivity; however, the underlying mechanisms require further exploration.