Objective Metformin, the first line drug for treatment of type 2 diabetes, suppresses hepatic gluconeogenesis and reduces body weight in patients, the latter by an unknown mechanism. Methods Mice on a high fat diet were continuously fed metformin in a therapeutically relevant dose, mimicking a retarded formulation. Results Feeding metformin in pharmacologically relevant doses to mice on a high fat diet normalized HbA1c levels and ameliorated glucose tolerance, as expected, but also considerably slowed down weight gain. This was due to increased energy expenditure, since food intake was unchanged and locomotor activity was even decreased. Metformin caused lactate accumulation in the intestinal wall and in portal venous blood but not in peripheral blood or the liver. Increased conversion of glucose-1-13C to glucose-1,6-13C under metformin strongly supports a futile cycle of lactic acid production in the intestinal wall, and usage of the produced lactate for gluconeogenesis in liver. Conclusions The reported glucose–lactate–glucose cycle is a highly energy consuming process, explaining the beneficial effects of metformin given continuously on the development of a type 2 diabetic-like state in our mice.