Numerous studies have shown an association between low weight at birth and being born small for gestational age (SGA) on the one hand and risk of developing insulin resistance and type 2 diabetes on the other. Our studies in twins have indicated a non-genetic age-dependent origin of insulin resistance and type 2 diabetes associated with being born SGA. In order to gain insight into the molecular metabolic defects and mechanisms linking SGA with insulin resistance and type 2 diabetes, we performed a series of experiments in young and elderly twins, and, in particular, in young men (aged 19–23 years) with a weight at birth at term in the lowest 10th percentile with no family history of diabetes. The control group included age-matched men with birth weights at term in the upper normal range. While body mass index and waist-to-hip ratios were similar in the individuals born SGA and controls, dual-energy X-ray absorptiometry studies documented a higher degree of abdominal obesity in the men who had a low weight at birth. Using the gold standard hyperinsulinaemic-euglycaemic clamp technique combined with glucose tracers and studies of forearm glucose uptake, we found an impairment of insulin-stimulated glycolytic flux and reduced forearm (muscle) glucose uptake in the face of normal whole-body glucose uptake. In addition, we found a significantly decreased insulin secretion rate during oral glucose ingestion after correction for insulin action (disposition index), a paradoxical enhanced insulin suppression of hepatic glucose production and lower fasting plasma glycerol levels, suggesting impaired lipolysis. Finally, analysis of skeletal muscle biopsies showed reduced muscle expression of several key proteins involved in insulin signalling and glucose transport, including protein kinase C-ζ, the two subunits of phosphoinositol 3-kinase (i.e., p85α and p110β) and the insulin-sensitive glucose transporter, Glut-4, in individuals of low birth weight. In conclusion, being born SGA and of low birth weight is associated with type 2 diabetes in a non-genetic manner, and programming of muscle insulin action and signalling represents an early mechanism responsible for this association.