Premature infants develop hyperglycemia shortly after birth, increasing their morbidity and death. Surviving infants have increased incidence of diabetes as young adults. Our understanding of the biological basis for the insulin resistance of prematurity and developmental regulation of glucose production remains fragmentary. The objective of this study was to examine maturational differences in insulin sensitivity and the insulin-signaling pathway in skeletal muscle and adipose tissue of 30 neonatal baboons using the euglycemic hyperinsulinemic clamp. Preterm baboons (67% gestation) had reduced peripheral insulin sensitivity shortly after birth (M value 12.5 ± 1.5 vs 21.8 ± 4.4 mg/kg · min in term baboons) and at 2 weeks of age (M value 12.8 ± 2.6 vs 16.3 ± 4.2, respectively). Insulin increased Akt phosphorylation, but these responses were significantly lower in preterm baboons during the first week of life (3.2-fold vs 9.8-fold). Preterm baboons had lower glucose transporter-1 protein content throughout the first 2 weeks of life (8%-12% of term). In preterm baboons, serum free fatty acids (FFAs) did not decrease in response to insulin, whereas FFAs decreased by greater than 80% in term baboons; the impaired suppression of FFAs in the preterm animals was paired with a decreased glucose transporter-4 protein content in adipose tissue. In conclusion, peripheral insulin resistance and impaired non-insulin-dependent glucose uptake play an important role in hyperglycemia of prematurity. Impaired insulin signaling (reduced Akt) contributes to the defect in insulin-stimulated glucose disposal. Counterregulatory hormones are not major contributors.