The Diabetes Prevention Program (DPP) showed that metformin reduced the incidence of diabetes in subjects with impaired glucose tolerance (IGT) who were at high risk of progression to type 2 diabetes. Metformin was not as efficient as intensive life style intervention, but had a clinically significant effect in obese individuals and in those with impaired fasting glucose (IFG). This review discusses the clinical implications and the mechanistic aspects of the effect of metformin in IGT and IFG. Acute actions of metformin on postprandial metabolism to improve hepatic glucose handling and improve the lipid profile could contribute to the lower incidence of diabetes. Longer term improvements in haemodynamic parameters and reduced oxidative stress are also implicated. Metformin offers a potential alternative or complement to lifestyle intervention for IGT, and deserves further evaluation in this respect.