The role of testosterone in improving sexual symptoms in men with hypogonadism is well known. However, recent studies indicate that testosterone plays an important role in several metabolic functions in males. Multiple PubMed searches were conducted with the use of the terms testosterone, insulin sensitivity, obesity, type 2 diabetes, anaemia, bone density, osteoporosis, fat mass, lean mass and body composition. This narrative review is focused on detailing the mechanisms that underlie the metabolic aspects of testosterone therapy in humans. Testosterone enhances insulin sensitivity in obese men with hypogonadism by decreasing fat mass, increasing lean mass, decreasing free fatty acids and suppressing inflammation. At a cellular level, testosterone increases the expression of insulin receptor β subunit, insulin receptor substrate‐1, protein kinase B and glucose transporter type 4 in adipose tissue and adenosine 5′‐monophosphate‐activated protein kinase expression and activity in skeletal muscle. Observational studies show that long‐term therapy with testosterone prevents progression from prediabetes to diabetes and improves HbA1c. Testosterone increases skeletal muscle satellite cell activator, fibroblast growth factor‐2 and decreases expression of the muscle growth suppressors, myostatin and myogenic regulatory factor 4. Testosterone increases haematocrit by suppressing hepcidin and increasing expression of ferroportin along with that of transferrin receptor and plasma transferrin concentrations. Testosterone also increases serum osteocalcin concentrations, which may account for its anabolic actions on bone. In conclusion, testosterone exerts a series of potent metabolic effects, which include insulin sensitization, maintenance and growth of the skeletal muscle, suppression of adipose tissue growth and maintenance of erythropoiesis and haematocrit.