Type 2 diabetes (T2D) is strongly linked to obesity and an adipose tissue unresponsive to insulin. The insulin resistance is due to defective insulin signaling, but details remain largely unknown. We examined insulin signaling in adipocytes from T2D patients, and contrary to findings in animal studies, we observed attenuation of insulin activation of mammalian target of rapamycin (mTOR) in complex with raptor (mTORC1). As a consequence, mTORC1 downstream effects were also affected in T2D: feedback signaling by insulin to signal-mediator insulin receptor substrate-1 (IRS1) was attenuated, mitochondria were impaired and autophagy was strongly upregulated. There was concomitant autophagic destruction of mitochondria and lipofuscin particles, and a dependence on autophagy for ATP production. Conversely, mitochondrial dysfunction attenuated insulin activation of mTORC1, enhanced autophagy and attenuated feedback to IRS1. The overactive autophagy was associated with large numbers of cytosolic lipid droplets, a subset with colocalization of perlipin and the autophagy protein LC3/atg8, which can contribute to excessive fatty acid release. Patients with diagnoses of T2D and overweight were consecutively recruited from elective surgery, whereas controls did not have T2D. Results were validated in a cohort of patients without diabetes who exhibited a wide range of insulin sensitivities. Because mitochondrial dysfunction, inflammation, endoplasmic-reticulum stress and hypoxia all inactivate mTORC1, our results may suggest a unifying mechanism for the pathogenesis of insulin resistance in T2D, although the underlying causes might differ.