Obese women experience worse reproductive outcomes than normal weight women, specifically infertility, pregnancy loss, fetal malformations and developmental delay of offspring. The aim of the present study was to use a genetic mouse model of obesity to recapitulate the human reproductive phenotype and further examine potential mechanisms and therapies. New inbred, polygenic Type 2 diabetic TallyHO mice and age-matched control C57BL/6 mice were superovulated to obtain morula or blastocyst stage embryos that were cultured in human tubal fluid (HTF) medium. Deoxyglucose uptake was determined for individual insulin-stimulated blastocysts. Apoptosis was detected by confocal microscopy using the terminal deoxyribonucleotidyl transferase-mediated dUTP-digoxigenin nick end-labelling (TUNEL) assay and Topro-3 nuclear dye. Embryos were scored for TUNEL-positive as a percentage of total nuclei. AMP-activated protein kinase (AMPK) activation, tumour necrosis factor (TNF)-α expression and adiponectin expression were analysed by western immunoblot and confocal immunofluorescent microscopy. Lipid accumulation was assayed by BODIPY. Comparisons were made between TallyHO morulae cultured to blastocyst embryos in either HTF medium or HTF medium with 25 μg mL(-1) metformin. TallyHO mice developed whole body abnormal insulin tolerance, had decreased litter sizes and increased non-esterified fatty acid levels. Blastocysts from TallyHO mice exhibited increased apoptosis, decreased insulin sensitivity and decreased AMPK. A possible cause for the insulin resistance and abnormal AMPK phosphorylation was the increased TNF-α expression and lipid accumulation, as detected by BODIPY, in TallyHO blastocysts and decreased adiponectin. Culturing TallyHO morulae with the AMPK activator metformin led to a reversal of all the abnormal findings, including increased AMPK phosphorylation, improved insulin-stimulated glucose uptake and normalisation of lipid accumulation. Women with obesity and insulin resistance experience poor pregnancy outcomes. Previously we have shown in mouse models of insulin resistance that AMPK activity is decreased and that activators of AMPK reverse poor embryo outcomes. Here, we show for the first time using a genetically altered obese model, not a diet-induced model, that metformin reverses many of the adverse effects of obesity at the level of the blastocyst. Expanding on this we determine that activation of AMPK via metformin reduces lipid droplet accumulation, presumably by eliminating the inhibitory effects of TNF-α, resulting in normalisation of fatty acid oxidation and HADH2 (hydroxyacyl-CoA dehydrogenase/3-ketoacyl-CoA thiolase/enoyl-CoA hydratase (trifunctional protein), alpha subunit) activity. Metformin exposure in vitro was able to partially reverse these effects, at the level of the blastocyst, and may thus be effective in preventing the adverse effects of obesity on pregnancy and reproductive outcomes.