Background Tumor necrosis factor α has a key role in insulin resistance. We study the effects of metformin on glucose tolerance, insulin resistance, beta cell function, and soluble tumor necrosis factor receptor (sTNFR) levels. Methods We performed a double-blind, randomized metformin-placebo study. Twenty-three subjects with impaired glucose tolerance or impaired fasting glucose were studied. Oral glucose tolerance, homeostasis model assessment, and continuous infusion of glucose with model assessment tests were used to evaluate glucose tolerance, insulin sensitivity, and beta cell function, respectively. Soluble tumor necrosis factor receptor levels were measured before and after therapy. Repeated measures analysis of variance was used for statistical analysis. Results After 12-week treatment, fasting glucose (110.1 ± 9.9 to 98.9 ± 15.7 mg/dl, P < .001), fasting insulin (11.6 ± 5.4 to 8.8 ± 3.5 mU/L, P = .05), fasting C-peptide (2.5 ± 0.7 to 1.8 ± 0.5 ng/mL, P < .05), and achieved C-peptide (5.2 ± 1.2 to 4.2 ± 1 ng/mL, P < .05) levels decreased in the metformin group. In addition, there was an improvement in insulin sensitivity (37.4% ± 15.2% to 50.4% ± 23.2%, P < .05) with unchanged sTNFR1 (2.0 ± 0.8 to 2.3 ± 1.2 μg/L, P = NS) and sTNFR2 (4.8 ± 1.7 to 4.4 ± 1.2 μg/L, P = NS) levels. Conclusions Metformin is able to reverse insulin resistance and hyperglycemia in high-risk subjects for type 2 diabetes mellitus independently of the effects on tumor necrosis factor α system activity.