We present a study of the superfluid properties of atomic Bose gases in optical lattice potentials using the Bose-Hubbard model. To do this, we use a microscopic definition of the superfluid fraction based on the response of the system to a phase variation imposed by means of twisted boundary conditions. We compare the superfluid fraction to other physical quantities, i.e., the interference pattern after ballistic expansion, the quasi-momentum distribution, and number fluctuations. We have performed exact numerical calculations of all these quantities for small one-dimensional systems. We show that the superfluid fraction alone exhibits a clear signature of the Mott-insulator transition. Observables like the fringe visibility, which probe only ground state properties, do not provide direct information on superfluidity and the Mott-insulator transition.PACS numbers: 03.75. Fi, 05.30.Jp, 73.43.Nq, Ultracold atomic gases in optical lattices provide a unique framework for the experimental study of fundamental quantum phenomena in interacting many-body systems. This is especially true for the exploration of quantum phase transitions such as the superfluid to Mott-insulator transition observed in a recent pioneering experiment [1]. The remarkable degree of experimental control over all the relevant parameters-density, interaction strength, lattice geometry and dimensionalityallows much more detailed studies of the complicated mechanisms behind quantum phase transition than conventional solid state systems.It is clearly the case that the most important quantity for characterizing the superfluid-to-insulator transition is the superfluid density or superfluid fraction f s . The aim of this paper is to set up the general theoretical framework for the calculation of the superfluid fraction within the Bose-Hubbard model and to compare it, on the formal level, with quantities being measured at the moment. These include the interference pattern after ballistic expansion, the quasi-momentum distribution as well as the number fluctuations which are important in applications. We perform exact numerical calculations for the Mott-insulator transition in an one-dimensional system to demonstrate the relationship, and more importantly the differences, between the superfluid fraction and various ground state observables, most notably the visibility of the interference pattern.Superfluidity. The concept of superfluidity is closely related to the existence of a condensate in the interacting many-boson system [2]. Formally, the one-body density matrix ρ (1) ( x, x ′ ) has to have exactly one macroscopic eigenvalue which defines the number of particles N 0 in the condensate; the corresponding eigenvector describes the condensate wave function φ 0 ( x) = e iθ( x) |φ 0 ( x)|. A spatially varying condensate phase θ( x) is associated with a velocity field for the condensate byThis irrotational velocity field is identified with velocity of the superfluid flow v s ( x) ≡ v 0 ( x) [2] and enables us to derive an expression for the superfluid fra...