Many studies have documented that ginseng has antidiabetic and antiobesity effects, but the mechanism of the effects has not been elucidated. The aim of this study was to determine the effect of Korean red ginseng (KRG, Panax ginseng) and investigate the mechanism of antidiabetic and antiobesity effects in obese insulin resistant animal models. Sprague-Dawley (SD) rats were divided into three groups: a control group (group I) fed a normal diet, another group (group II) fed only high fat diet (HFD) and a third group (group III) fed HFD with KRG (200 mg/kg, oral) for 18 weeks. The body weight, food intake, adipose tissues, liver, kidney, pancreas, adiponectin, and leptin were measured. Blood glucose, insulin tolerance test, and hyperinsulinemic euglycemic clamp test were investigated. A significant weight reduction, especially fat mass reduction, was observed in the KRG treated group. Increased insulin sensitivity was found in the KRG treated group. We observed increased insulin signalling, increased phosphorylation of IR, IRS-1, Akt, and membranous GLUT4 in muscle by Western blotting assay. In conclusion, KRG may have antidiabetic and antiobesity effects due to partly increased insulin sensitivity by increased adipokine and partly enhanced insulin signalling. Copyright © 2011 John Wiley & Sons, Ltd.