Despite its position as the first-line treatment for type 2 diabetes mellitus, the mechanisms underlying the plasma glucose level-lowering effects of metformin (1,1dimethylbiguanide) still remain incompletely understood. Metformin is thought to exert its primary antidiabetic action through the suppression of hepatic glucose production. Furthermore, the discovery that metformin inhibits the mitochondrial respiratory-chain complex 1 has placed energy metabolism and activation of AMP-activated protein kinase (AMPK) at the center of its mechanism of action. However, the role of AMPK has been challenged and might only account for indirect changes in hepatic insulin sensitivity. Various mechanisms involving alterations of cellular energy charge, AMP-mediated inhibition of adenylate cyclase or fructose-1,6-bisphosphatase-1 (FBP1) and modulation of the cellular redox state through direct inhibition of mitochondrial glycerol-3phosphate dehydrogenase (mG3PDH) are proposed for the acute inhibition of gluconeogenesis by metformin. Emerging evidence suggests that metformin could improve obesity-induced meta-inflammation via direct and indirect effects on tissueresident immune cells in metabolic organs (that is, adipose tissue, the gastrointestinal tract and the liver). Furthermore, the gastrointestinal tract also has a major role in metformin action through modulation of glucose-lowering hormone glucagon-like peptide-1 (GLP-1) and intestinal bile acid pool and alterations in gut microbiota composition. 3 Key points • Metformin is the first-line drug for treatment of type 2 diabetes mellitus, with an excellent safety profile, high efficacy on glycaemic control and clear but incompletely understood cardioprotective benefits. • The pleiotropic properties of metformin suggest that the drug acts on multiple tissues through various underlying mechanisms rather than on a single organ via an unifying mode of action. • The mitochondrial respiratory-chain complex 1 is a key cellular target of metformin and its mild and transient inhibition is involved in the AMPK-independent regulation of hepatic gluconeogenesis by triggering alterations in the cellular energy charge and redox state. • Metformin might contribute to improvements in obesity-associated metainflammation and tissue-specific insulin sensitivity through direct and indirect effects on various resident immune cells in metabolic organs. • The gastrointestinal tract has an important role in the action of metformin, which modulates bile acid recirculation and enhances the secretion of the glucose-lowering gut incretin hormone glucagon-like peptide-1 (GLP1). • The gut microbiota represents a novel target in the mechanisms of metformin action and is involved in both the therapeutic and adverse effects of the drug.