Over the past decade, it has become apparent that bile acids are involved in a host of activities beyond their classic functions in bile formation and fat absorption. The identification of the farnesoid X receptor (FXR) as a nuclear receptor directly activated by bile acids and the discovery that bile acids are also ligands for the membrane-bound, G-protein coupled bile acid receptor 1 (also known as TGR5) have opened new avenues of research. Both FXR and TGR5 regulate various elements of glucose, lipid and energy metabolism. Consequently, a picture has emerged of bile acids acting as modulators of (postprandial) metabolism. Therefore, strategies that interfere with either bile acid metabolism or signalling cascades mediated by bile acids may represent novel therapeutic approaches for metabolic diseases. Synthetic modulators of FXR have been designed and tested, primarily in animal models. Furthermore, the use of bile acid sequestrants to reduce plasma cholesterol levels has unexpected benefits. For example, treatment of patients with type 2 diabetes mellitus (T2DM) with sequestrants causes substantial reductions in plasma levels of glucose and HbA1c. This Review aims to provide an overview of the molecular mechanisms by which bile acids modulate glucose and energy metabolism, particularly focusing on the glucose-lowering actions of bile acid sequestrants in insulin resistant states and T2DM.