Context: Insulin-stimulated glucose disposal is impaired in obesity and type 2 diabetes mellitus (T2DM) and is tightly linked to impaired skeletal muscle glucose uptake and storage. Impaired activation of glycogen synthase (GS) by insulin is a well-established defect in both obesity and T2DM, but the underlying mechanisms remain unclear. Design and Participants: Insulin action was investigated in a matched cohort of lean healthy, obese nondiabetic, and obese type 2 diabetic subjects by the euglycemic-hyperinsulinemic clamp technique combined with muscle biopsies. Activity, site-specific phosphorylation, and upstream signaling of GS were evaluated in skeletal muscle. Results: GS activity correlated inversely with phosphorylation of GS site 2+2a and 3a. Insulin significantly decreased 2+2a phosphorylation in lean subjects only and induced a larger dephosphorylation at site 3 in lean compared with obese subjects. The exaggerated insulin resistance in T2DM compared with obese subjects was not reflected by differences in site 3 phosphorylation but was accompanied by a significantly higher site 1b phosphorylation during insulin stimulation. Hyperphosphorylation of another Ca(2+)/calmodulin-dependent kinase-II target, phospholamban-Thr17, was also evident in T2DM. Dephosphorylation of GS by phosphatase treatment fully restored GS activity in all groups. Conclusions: Dysregulation of GS phosphorylation plays a major role in impaired insulin regulation of GS in obesity and T2DM. In obesity, independent of T2DM, this is associated with impaired regulation of site 2+2a and likely site 3, whereas the exaggerated insulin resistance to activate GS in T2DM is linked to hyperphosphorylation of at least site 1b. Thus, T2DM per se seems unrelated to defects in the glycogen synthase kinase-3 regulation of GS.