The prevalence of type 2 diabetes and its related metabolic disorders including obesity and insulin resistance is increasing dramatically worldwide. Reduced physical activity in human population is closely linked with this epidemiological trend, due to technological advance and economic transition for the recent decades. Efforts to halt or reduce the incidence are of paramount importance in the 21st century. A number of recent follow-up studies has evidenced that increased physical activity can reduce the incidence of type 2 diabetes in persons at high risk. Despite a large international effort, the underlying mechanisms by which exercise enhances insulin sensitivity are still poorly understood, particularly in humans. The purpose of this review is to summarize the current knowledge of the mechanisms of exercise enhanced insulin sensitivity revealed in human studies. We will first introduce the topic of insulin sensitivity and highlight the major sites of insulin resistance within the body. Secondly we will develop insulin signaling cascades in muscle and describe the likely mechanisms that lead to insulin resistance. In third section, we will propose the contraction-induced signaling pathway, which has been shown to be involved in the regulation of glucose disposal. Finally we will discuss the likely mechanisms by which exercise improves peripheral insulin sensitivity and the interactions of insulin and exercise stimulations, particularly in skeletal muscle.