AIMS/HYPOTHESIS: Both energy restriction (ER) per se and weight loss improve glucose metabolism in obese insulin-treated type 2 diabetic patients. Short-term ER decreases basal endogenous glucose production (EGP) but not glucose disposal. In contrast the blood glucose-lowering mechanism of long-term ER with substantial weight loss has not been fully elucidated. The aim of this study was to investigate the effect of loss of 50% of excess weight [50% excess weight reduction (EWR)] on EGP, whole-body insulin sensitivity and the disturbed myocellular insulin-signalling pathway in ten obese insulin-treated type 2 diabetic patients. METHODS: A euglycaemic-hyperinsulinaemic clamp with stable isotopes ([6,6-(2)H2]glucose and [2H5]glycerol) combined with skeletal muscle biopsies was performed during a very low energy diet (VLED; 1,883 kJ/day) on day 2 and again after 50% EWR. Oral blood glucose-lowering agents and insulin were discontinued 3 weeks prior to the VLED and at the start of the VLED, respectively. RESULTS: Loss of 50% EWR (20.3+/-2.2 kg from day 2 to day of 50% EWR) normalised basal EGP and improved insulin sensitivity, especially insulin-stimulated glucose disposal (18.8+/-2.0 to 39.1+/-2.8 micromol kg fat-free mass(-1) min(-1), p=0.001). The latter was accompanied by improved insulin signalling at the level of the recently discovered protein kinase B/Akt substrates AS160 and PRAS40 along with a decrease in intramyocellular lipid (IMCL) content. CONCLUSIONS/INTERPRETATION: Considerable weight loss in obese, insulin-treated type 2 diabetic patients normalises basal EGP and improves insulin sensitivity resulting from an improvement in insulin signal transduction in skeletal muscle. The decrease in IMCL might contribute to this effect.