Cross‐sectional human studies have associated mitochondrial dysfunction to type 2 diabetes. We chose Zucker diabetic fatty (ZDF) rats as a model of progressive insulin resistance to examine whether intrinsic mitochondrial defects are required for development of type 2 diabetes. Muscle mitochondrial function was examined in 6‐, 12‐, and 19‐week‐old ZDF (fa/fa) and fa/+ control rats (n = 8–10 per group) using respirometry with pyruvate, glutamate, and palmitoyl‐CoA as substrates. Six‐week‐old normoglycemic–hyperinsulinemic fa/fa rats had reduced mitochondrial fat oxidative capacity. Adenosine diphosphate (ADP)‐driven state 3 and carbonyl cyanide p‐trifluoromethoxyphenylhydrazone (FCCP)‐stimulated state uncoupled (state u) respiration on palmitoyl‐CoA were lower compared to controls (62.3 ± 9.5 vs. 119.1 ± 13.8 and 87.8 ± 13.3 vs. 141.9 ± 14.3 nmol O2/mg/min.). Pyruvate oxidation in 6‐week‐old fa/fa rats was similar to controls. Remarkably, reduced fat oxidative capacity in 6‐week‐old fa/fa rats was compensated for by an adaptive increase in intrinsic mitochondrial function at week 12, which could not be maintained toward week 19 (140.9 ± 11.2 and 57.7 ± 9.8 nmol O2/mg/min, weeks 12 and 19, respectively), whereas hyperglycemia had developed (13.5 ± 0.6 and 16.1 ± 0.3 mmol/l, weeks 12 and 19, respectively). This mitochondrial adaptation failed to rescue the progressive development of insulin resistance in fa/fa rats. The transition of prediabetes state toward advanced hyperglycemia and hyperinsulinemia was accompanied by a blunted increase in uncoupling protein‐3 (UCP3). Thus, in ZDF rats insulin resistance develops progressively in the absence of mitochondrial dysfunction. In fact, improved mitochondrial capacity in hyperinsulinemic hyperglycemic rats does not rescue the progression toward advanced stages of insulin resistance.