T o further explore the nature of the mitochondrial dysfunction and insulin resistance that occur in the muscle of young, lean, normoglycemic, insulin-resistant offspring of parents with type 2 diabetes (IR offspring), we measured mitochondrial content by electron microscopy and insulin signaling in muscle biopsy samples obtained from these individuals before and during a hyperinsulinemic-euglycemic clamp. The rate of insulin-stimulated muscle glucose uptake was approximately 60% lower in the IR offspring than the control subjects and was associated with an approximately 60% increase in the intramyocellular lipid content as assessed by ¹H magnetic resonance spectroscopy. Muscle mitochondrial density was 38% lower in the IR offspring. These changes were associated with a 50% increase in IRS-1 Ser312 and IRS-1 Ser636 phosphorylation and an approximately 60% reduction in insulin-stimulated Akt activation in the IR offspring. These data provide new insights into the earliest defects that may be responsible for the development of type 2 diabetes and support the hypothesis that reductions in mitochondrial content result in decreased mitochondrial function, which predisposes IR offspring to intramyocellular lipid accumulation, which in turn activates a serine kinase cascade that leads to defects in insulin signaling and action in muscle.