The effect of metformin or rosiglitazone monotherapy versus placebo on insulin signaling and gene expression in skeletal muscle of patients with newly diagnosed type 2 diabetes was determined. A euglycemic-hyperinsulinemic clamp, combined with skeletal muscle biopsies and glucose uptake measurements over rested and exercised muscle, was performed before and after 26 weeks of metformin (n = 9), rosiglitazone (n = 10), or placebo (n = 11) treatment. Insulin-mediated whole-body and leg muscle glucose uptake was enhanced 36 and 32%, respectively, after rosiglitazone (P < 0.01) but not after metformin or placebo treatment. Insulin increased insulin receptor substrate 1 (IRS-1) tyrosine phosphorylation, IRS-1-associated phosphatidylinositol (PI) 3-kinase activity, and phosphorylation of Akt Ser473 and AS160, a newly described Akt substrate that plays a role in GLUT4 exocytosis, approximately 2.3 fold before treatment. These insulin signaling parameters were unaltered after metformin, rosiglitazone, or placebo treatment. Expression of selected genes involved in glucose and fatty acid metabolism in skeletal muscle was unchanged between the treatment groups. Low-intensity acute exercise increased insulin-mediated glucose uptake but was without effect on insulin signaling. In conclusion, the insulin-sensitizing effects of rosiglitazone are independent of enhanced signaling of IRS-1/PI 3-kinase/Akt/AS160 in patients with newly diagnosed type 2 diabetes.