Although considerable efforts have been made since the 1950s to better understand the action of metformin, the first line therapeutic for type 2 diabetes, its mechanisms of action has not been fully elucidated. The main antidiabetic effect of this drug is to decrease hepatic glucose production. A plausible molecular mechanism of action now emerges from recent breakthroughs that place metformin at the control of energy homeostasis. Metformin was shown to induce a mild and transient inhibition of the mitochondrial respiratory chain complex 1. The resulting decrease in hepatic energy state activates the AMP-activated protein kinase (AMPK), a cellular metabolic sensor, and provided a generally accepted mechanism for metformin action on hepatic gluconeogenic program. However, the role of AMPK activation in metformin action has recently been challenged by loss-of-function experiments. Recent evidence showed that metformin-induced inhibition of hepatic glucose output is mediated by reducing cellular energy charge rather than direct inhibition of gluconeogenic gene expression. Furthermore, recent data support a novel mechanism of action for metformin involving antagonism of glucagon signaling pathways by inducing the accumulation of AMP, which inhibits adenylate cyclase and reduced levels of cAMP.