The cytokine leukemia-inhibitory factor (LIF) is expressed by skeletal muscle and induces proliferation of muscle precursor cells, an important feature of skeletal muscle maintenance and repair. We hypothesized that muscle precursor cells from patients with type 2 diabetes had a deficient response to LIF. The mRNA and protein expressions of LIF and its receptor (LIFR) were measured in skeletal muscle biopsies from healthy individuals and patients with type 2 diabetes by use of qPCR and Western blot. LIF signaling and response were studied following administration of recombinant LIF and siRNA knockdown of suppressor of cytokine signaling (SOCS)3 in myoblast cultures established from healthy individuals and patients with type 2 diabetes. Myoblast proliferation rate was assessed by bromodeoxyuridine incorporation. LIF and LIFR proteins were increased in both muscle tissue and cultured myoblasts from diabetic patients. Nonetheless, in the diabetic myoblasts, LIF-induced phosphorylation of signal transducer and activator of transcription (STAT)1 and STAT3 was impaired. The deficient response to LIF administration in the diabetic myoblasts was further emphasized by a lack of increase in LIF-stimulated cell proliferation and a decreased LIF-stimulated induction of the proliferation-promoting factors cyclin D1, JunB, and c-myc. SOCS3 protein was upregulated in diabetic myoblasts, and knockdown of SOCS3 rescued LIF-induced gene expression in diabetic myoblasts, whereas neither STAT1 or STAT3 signaling nor proliferation rate was affected. In conclusion, although LIF and LIFR proteins were increased in muscle tissue and myoblasts from diabetic patients, LIF signaling and LIF-stimulated cell proliferation were impaired in diabetic myoblasts, suggesting a novel mechanism by which muscle function is compromised in diabetes.