Bariatric surgery is very effective at inducing weight loss and diabetes resolution in morbidly obese patients. Whether WL or increased incretin response is the crucial factor in normalising diabetes is still debatable. This thesis work prospectively investigated how bariatric surgery affected insulin action and beta-cell function in patients with morbid obesity and type 2 diabetes. Understanding these can help us to optimise diabetes treatments in patients with morbid obesity. I first discussed how obesity affects insulin sensitivity and beta-cell function, evidences that bariatric surgery is superior to conventional medical therapy at inducing weight loss and euglycaemia, and its associated mechanisms. I concluded that more robust data are needed to understand the effects of LAGB and RYGB surgery on glucose homeostasis, as this will have clinical implications for patients undergoing bariatric surgery (Chapter 1). I then described and justified the methods used for investigating insulin sensitivity and insulin secretion in the two studies (GLIPO and ISP) that make up this thesis (Chapter 2). I demonstrated that at 1 week post-op, improvements in glycaemia, insulin sensitivity and weight were the same in all patients, despite unilateral increase in incretin responses in the RYGB group. At 18 months I found that RYGB (n=32) had induced greater weight loss than LAGB (n=17). This resulted in better glycaemic control, further insulin sensitivity enhancement and marked improvements in insulin secretion and pancreatic secretory reserve in this group (Chapter 3&4). Finally, I demonstrated that marked weight loss after RYGB normalised insulin signalling (PI3K-Akt), but not glucose uptake in muscle. This suggested that major defects in the insulin signalling pathway still exist and may explain why not all patients can achieve diabetes remission after RYGB (Chapter 5). In conclusion, the degree of weight loss, not enhanced incretin response, is the major determinant of glycaemic improvement after bariatric surgery. This improvement is first brought about by improvements in insulin sensitivity followed by improvements in insulin secretion.