Type 2 diabetes mellitus (DM) is characterized by insulin resistance and pancreatic beta cell dysfunction. In high-risk subjects, the earliest detectable abnormality is insulin resistance in skeletal muscle. Impaired insulin-mediated signaling, gene expression, glycogen synthesis, and accumulation of intramyocellular triglycerides have all been linked with insulin resistance, but no specific defect responsible for insulin resistance and DM has been identified in humans. To identify genes potentially important in the pathogenesis of DM, we analyzed gene expression in skeletal muscle from healthy metabolically characterized nondiabetic (family history negative and positive for DM) and diabetic Mexican-American subjects. We demonstrate that insulin resistance and DM associate with reduced expression of multiple nuclear respiratory factor-1 (NRF-1)-dependent genes encoding key enzymes in oxidative metabolism and mitochondrial function. Although NRF-1 expression is decreased only in diabetic subjects, expression of both PPAR gamma coactivator 1-alpha and-beta (PGC1-alpha/PPARGC1 and PGC1-beta/PERC), coactivators of NRF-1 and PPAR gamma-dependent transcription, is decreased in both diabetic subjects and family history-positive nondiabetic subjects. Decreased PGC1 expression may be responsible for decreased expression of NRF-dependent genes, leading to the metabolic disturbances characteristic of insulin resistance and DM.