AIMS/HYPOTHESIS: The metabolic abnormalities of insulin resistance are ameliorated by insulin sensitisers via different mechanisms. Metformin decreases hepatic glucose output, whereas rosiglitazone (RSG) is an agonist for peroxisome proliferator activated receptor (PPAR)gamma, highly expressed in fat. To gain insight into the mechanisms of action of these drugs, we compared their actions in two models of insulin resistance: the obese, hyperglycaemic ob/ob mouse and the liver specific insulin receptor knockout (LIRKO) mouse. METHODS: Control, ob/ob, and LIRKO mice were divided into three groups that received metformin (300 mg/kg body weight/day), RSG (3 mg/kg body weight/day), or placebo for 3 weeks. RESULTS: In the presence of the severe hepatic insulin resistance of the LIRKO mouse, neither metformin nor RSG had any significant effect on glucose or insulin tolerance tests. On the other hand, RSG decreased serum concentrations of total cholesterol, LDL, and HDL in LIRKO mice. Adipocyte PPARgamma gene and protein expression, and adipocyte size were all increased in LIRKO mice treated with RSG, whereas fat-cell size in control animals was decreased by RSG. CONCLUSION/INTERPRETATION: TZDs probably improve some lipid parameters of the dysmetabolic syndrome associated with diabetes mellitus even in the presence of absolute hepatic insulin resistance, but both metformin and TZDs require an operating insulin signalling system in the liver for their effects in glucose homeostasis.