Skeletal muscle is strongly dependent on oxidative phosphorylation for energy production. Because the insulin resistance of skeletal muscle in type 2 diabetes and obesity entails dysregulation of the oxidation of both carbohydrate and lipid fuels, the current study was undertaken to examine the potential contribution of perturbation of mitochondrial function. Vastus lateralis muscle was obtained by percutaneous biopsy during fasting conditions from lean (n = 10) and obese (n = 10) nondiabetic volunteers and from volunteers with type 2 diabetes (n = 10). The activity of rotenone-sensitive NADH:O₂ oxidoreductase, reflecting the overall activity of the respiratory chain, was measured in a mitochondrial fraction by a novel method based on providing access for NADH to intact mitochondria via alamethicin, a channel-forming antibiotic. Creatine kinase and citrate synthase activities were measured as markers of myocyte and mitochondria content, respectively. Activity of rotenone-sensitive NADH:O₂ oxidoreductase was normalized to creatine kinase activity, as was citrate synthase activity. NADH:O₂ oxidoreductase activity was lowest in type 2 diabetic subjects and highest in the lean volunteers (lean 0.95 ± 0.17, obese 0.76 ± 0.30, type 2 diabetes 0.56 ± 0.14 units/mU creatine kinase; P < 0.005). Also, citrate synthase activity was reduced in type 2 diabetic patients (lean 3.10 ± 0.74, obese 3.24 ± 0.82, type 2 diabetes 2.48 ± 0.47 units/mU creatine kinase; P < 0.005). As measured by electron microscopy, skeletal muscle mitochondria were smaller in type 2 diabetic and obese subjects than in muscle from lean volunteers (P < 0.01). We conclude that there is an impaired bioenergetic capacity of skeletal muscle mitochondria in type 2 diabetes, with some impairment also present in obesity.