The ability of the biguanide hypoglycemic agent metformin to improve the acute effects of insulin on glucose and/or lipid metabolism was investigated in both insulin-responsive and insulin-resistant cultured rat hepatocytes: (1) metformin (20 micrograms/mL, 16 hours) increased the insulin-dependent stimulation of glycogen and lipid synthesis through an exclusive enhancement of the responsiveness without modification of the cell sensitivity to the hormone; (2) metformin neither altered basal glycogenesis from [U-14C]glucose and basal lipogenesis from [1-14C]acetate nor insulin binding. These results indicate the ability of this drug to selectively potentiate the acute action of insulin at a postreceptor step in normal liver cells. A prolonged incubation with insulin (16 hours, 5 x 10(-7) mol/L) led the hepatocytes to a state of resistance evidenced by a 50% decrease in their maximal responsiveness and sensitivity to a subsequent acute stimulation by the hormone, as assessed on lipogenesis. Addition of metformin (20 micrograms/mL) during the overnight incubation of hepatocytes with insulin prevented the decrease in cell responsiveness and sensitivity to the hormone for the stimulation of lipogenesis, thus showing that metformin was able to hamper the development of the resistant state to the hormone in this pathway. These results strongly suggest that metformin improves type 2 diabetes through an effect at the hepatic level on both insulin action and insulin-induced resistance.