During the past half-century, there has been a dramatic increase in the incidence of obesity, insulin resistance and type 2 diabetes. A hallmark feature of these conditions is impaired glucose tolerance (IGT). Cross-sectional and retrospective epidemiological studies have provided direct evidence that a lack of physical activity is strongly associated with IGT. Indeed, physical inactivity is an independent risk factor for insulin resistance and type 2 diabetes. The primary defect(s) in the development of whole-body insulin resistance remain unclear. However, during the past decade significant progress has been made towards an understanding of the molecular basis underlying the beneficial effects of exercise training in stimulating the entry of glucose into insulin-sensitive tissues. Accordingly, it is now well accepted that regular physical exercise offers an effective therapeutic intervention to improve insulin action in skeletal muscle in insulin-resistant individuals. This review provides evidence that physical inactivity is significantly associated with IGT and directly contributes to the cascade of events that lead to the expression of the ‘exercise-deficient phenotype’ associated with insulin resistance and type 2 diabetes. In contrast, exercise training will be shown to significantly reduce the risk of developing insulin resistance by improving glucose tolerance and insulin action in individuals predisposed to develop type 2 diabetes. Several putative mechanisms for enhanced glucose uptake after exercise training will be discussed. A determination of the underlying biological mechanisms that result from exercise training is essential in order to define the precise variations in physical activity that result in the most desired effects on targeted risk factors, and to aid in the development of such interventions.