Metformin is used worldwide as an insulin sensitizer. Adipose derived mesenchymal stem cells have shown promising results in the reducing hyperglycemia. We examined whether preconditioning of adipose derived mesenchymal stem cells (ASCs) with metformin could have a better therapeutic value for the reversal of type 2 diabetes. We compared the effect of metformin, ASCs and metformin preconditioned ASCs (MetASCs) in high fat diet induced C57BL/6 mice by injecting the cells intramuscularly only once where as metformin was given at a concentration of 300 mg per kg body weight orally daily. Fasting glucose was measured every week for 4 weeks. At the end of the study insulin, triglycerides, IL6 and oxidised LDL were evaluated from the serum. Gene expression studies were performed for muscle (GLUT4) and liver tissues (IL6 and PAI1).There was a remarkable decrease in hyperglycemia within two weeks of injection by MetASCs as compared to metformin and ASCs alone. A significant decrement of hyperinsulinemia, triglyceridemia, serum IL6 and oxidised LDL were observed at the end of the study. Gene expression studies for muscle tissue revealed the drastic upregulation of GLUT4 gene levels in the MetASCs group indicating enhanced glucose uptake in muscle. Liver tissue analysed for the genes involved in inflammation viz. IL6 and PAI1 showed significant downregulation in the MetASCs group as compared to the other groups. This is a first report demonstrating the synergistic effect of metformin preconditioning of ASCs leading to reversal of hyperglycemia, hyperinsulinemia and triglyceridemia.