The early stages of type 2 diabetes mellitus are characterized by the development of insulin resistance (IRe) in muscle cells and adipocytes with the concomitant loss of beta-cell compensation. We have extensively reviewed the literature related to metabolic and signalling pathways of reactive oxygen species (ROS) in regard to the coordinated development of oxidative stress and IRe. We considered the hypothesis that oxidative stress leads to IRe in muscle cells and adipocytes, but found that the data are more consistent with the hypothesis that the cellular mechanisms that protect against oxidative stress per se are capable of creating an ROS-dependent insulin-resistant state. Furthermore, ROS-induced mitochondrial dysfunction can lead to disruptions of lipid metabolism, increasing the intracellular lipid content, and, in addition, contribute to lipid-dependent IRe in myocytes. Together, these two ROS-activated pathways to IRe can contribute to a global state of profound resistance to insulin action. Therapeutic strategies should, therefore, be directed towards reducing insulin resistance without an increase in ROS production or concentration. Pharmacological or other approaches to IRe that result in the activation of mitochondrial biogenesis in particular could be highly beneficial in the prevention or treatment of both insulin resistance and type 2 diabetes.