The worldwide prevalence of type 2 diabetes (T2D) and related disorders of the metabolic syndrome (MS) has reached epidemic proportions. Insulin resistance (IR) is a major perturbation that characterizes these disorders. Extra-adipose accumulation of lipid, particularly within the liver and skeletal muscle, is closely linked with the development of IR. The AMP-activated protein kinase (AMPK) pathway plays an important role in the regulation of both lipid and glucose metabolism. Through its effects to increase fatty acid oxidation and inhibit lipogenesis, AMPK activity in the liver and skeletal muscle could be expected to ameliorate lipid accumulation and associated IR in these tissues. In addition, AMPK promotes glucose uptake into skeletal muscle and suppresses glucose output from the liver via insulin-independent mechanisms. These characteristics make AMPK a highly attractive target for the development of strategies to curb the prevalence and costs of T2D. Recent insights into the regulation of AMPK and mechanisms by which it modulates fuel metabolism in liver and skeletal muscle are discussed here. In addition, we consider the arguments for and against the hypothesis that dysfunctional AMPK contributes to IR. Finally we review studies which assess AMPK as an appropriate target for the prevention and treatment of T2D and MS.