Metformin is a first-line antidiabetic agent taken by 150 million people across the world every year, yet its mechanism remains only partially understood and controversial. It was proposed that suppression of glucose production in hepatocytes by metformin is AMPK-independent; however, unachievably high concentrations of metformin were employed in these studies. In the current study, we find that metformin, via an AMP-activated protein kinase (AMPK)-dependent mechanism, suppresses glucose production and gluconeogenic gene expression in primary hepatocytes at concentrations found in the portal vein of animals (60–80 μm). Metformin also inhibits gluconeogenic gene expression in the liver of mice administered orally with metformin. Furthermore, the cAMP-PKA pathway negatively regulates AMPK activity through phosphorylation at Ser-485/497 on the α subunit, which in turn reduces net phosphorylation at Thr-172. Because diabetic patients often have hyperglucagonemia, AMPKα phosphorylation at Ser-485/497 is a therapeutic target to improve metformin efficacy. Background: Whether suppression of glucose production by metformin is through AMPK-dependent inhibition of gluconeogenic gene expression remains controversial. Results: Metformin inhibits gluconeogenic gene expression in hepatocytes. Conclusion: Low metformin concentrations found in the portal vein suppress glucose production via AMPK-dependent mechanism. Significance: The hyperglucagonemia of diabetes mellitus decreases metformin suppression of glucose production through a PKA-mediated phosphorylation of the AMPK α subunit at Ser-485/497.