Skeletal muscle insulin resistance in obese patients with non-insulin-dependent diabetes mellitus (NIDDM) is characterized by decreased glucose uptake. Although reduced glycogen synthesis is thought to be the predominant cause for this deficit, studies supporting this notion often have been conducted at supraphysiological insulin concentrations in which glucose storage is the overwhelming pathway of glucose disposal. However, at lower, more physiological insulin concentrations, decreased muscle glucose oxidation could play a significant role. This study was undertaken to determine whether, under euglycemic conditions, insulin resistance for leg muscle glucose uptake in NIDDM patients is due primarily to decreased glucose storage or to oxidation. The leg balance technique and leg indirect calorimetry were used under steady-state euglycemic conditions to estimate muscle glucose uptake, storage, and oxidation in eight moderately obese NIDDM patients and eight matched-control subjects. Leg muscle biopsies also were performed to determine whether alterations in muscle pyruvate dehydrogenase or glycogen synthase activities could explain defects in glucose oxidation or storage. At insulin concentrations of ∼ 500–600 pM, leg glucose uptake, oxidation, and storage in the NIDDM group (2.03 ± 0.42, 1.00 ± 0.13, 0.66 ± 0.36 μmol · min⁻¹ · 100 ml⁻¹) were significantly lower (P < 0.05) than rates in control subjects (5.14 ± 0.64, 1.92 ± 0.17, 2.80 ± 0.54). Pyruvate dehydrogenase and glycogen synthase activities were also decreased, consistent with the in vivo metabolic defects. The average deficit in leg glucose uptake in NIDDM was 3.11 ± 0.42 μmol · min⁻¹ μ 100 ml⁻¹. Of this deficit, 66% (2.14 ± 0.36 μmol min⁻¹ · 100 ml⁻¹) was due to decreased leg glucose storage and 33% (0.92 ± 0.13 μmol min⁻¹ · 100 ml⁻¹) to decreased leg glucose oxidation. Our findings confirm that decreased muscle glucose storage during hyperinsulinemia is the largest defect in glucose metabolism but also reveal a major defect in glucose oxidation. These studies reinforce the notion that muscle insulin resistance in obese NIDDM patients is characterized by a panoply of intracellular defects in glucose metabolism and insulin action.