Activation of AMP-activated protein kinase (AMPK) by exercise induces several cellular processes in muscle. Exercise activation of AMPK is unaffected in lean (BMI ∼25 kg/m²) subjects with type 2 diabetes. However, most type 2 diabetic subjects are obese (BMI >30 kg/m²), and exercise stimulation of AMPK is blunted in obese rodents. We examined whether obese type 2 diabetic subjects have impaired exercise stimulation of AMPK, at different signaling levels, spanning from the upstream kinase, LKB1, to the putative AMPK targets, AS160 and peroxisome proliferator–activated receptor coactivator (PGC)-1α, involved in glucose transport regulation and mitochondrial biogenesis, respectively. Twelve type 2 diabetic, eight obese, and eight lean subjects exercised on a cycle ergometer for 40 min. Muscle biopsies were done before, during, and after exercise. Subjects underwent this protocol on two occasions, at low (50% Vo_2max) and moderate (70% Vo_2max) intensities, with a 4–6 week interval. Exercise had no effect on LKB1 activity. Exercise had a time- and intensity-dependent effect to increase AMPK activity and AS160 phosphorylation. Obese and type 2 diabetic subjects had attenuated exercise-stimulated AMPK activity and AS160 phosphorylation. Type 2 diabetic subjects had reduced basal PGC-1 gene expression but normal exercise-induced increases in PGC-1 expression. Our findings suggest that obese type 2 diabetic subjects may need to exercise at higher intensity to stimulate the AMPK-AS160 axis to the same level as lean subjects.