Updated May 12, 2015.

Written or reviewed by a board-certified physician. See About.com's Medical Review Board.

Insulin has a hand in several processes in your body: Not only does it assist with metabolizing carbohydrates and storing glucose for energy in cells, but it also helps utilize the fat, protein, and certain minerals you eat. Because this hormone is so important in helping your body use the foods you ingest, a problem with insulin can have widespread effects on all of your body's systems, tissues, and organs -- either directly or indirectly.

If you have type 2 diabetes, learning how insulin works can help you understand why so many other medical conditions are associated with diabetes, why certain lifestyle practices are beneficial, and how your body reacts to food.

Where Insulin is Produced in the Body

Insulin is a hormone made up of a small polypeptide protein that is secreted by the pancreas, which acts as both an endocrine and exocrine gland. Endocrine glands are the system of glands that secrete hormones to regulate body functions. Exocrine glands aid in digestion.

The pancreas sits behind the stomach, nestled in the curve of the duodenum (the first part of the small intestine), and contains clusters of cells called islets of Langerhans. Islets are made up of beta cells, which produce and release insulin into the bloodstream.

Insulin is Part of a Balancing Act

Insulin affects carbohydrate, protein, and fat metabolism. Your body breaks these nutrients down into sugar molecules, amino acid molecules, and lipid molecules, respectively.

The body can also store and reassemble these molecules into more complex forms. Insulin causes the storage of these nutrients, while another pancreatic hormone called glucagon releases them from storage.

Insulin is involved in your body's careful balancing act to keep your blood sugar levels within a normal range. In simple terms:

• If your blood sugar is high: The pancreas releases insulin to help cells absorb glucose from the bloodstream to lower blood sugar levels.
• If your blood sugar is low: The pancreas releases glucagon to help the liver release stored glucose into the bloodstream to raise blood sugar levels.

Blood sugar levels rise when most foods are consumed, but they rise more rapidly and drastically with carbohydrates. The digestive system releases glucose from foods and the glucose molecules are absorbed into the bloodstream. The rising glucose levels signal the pancreas to secrete insulin to clear out glucose from the bloodstream. Insulin binds with insulin receptors on cell surfaces and acts as a key to open up the cells to receive glucose. Insulin receptors are on almost all tissues, including muscle cells and fat cells.

Insulin receptors have two main components -- the exterior and interior portions. The exterior portion extends outside the cell and binds with insulin. When this happens, the interior part of the receptor sends out a signal inside the cell for glucose transporters to mobilize to the surface and receive glucose. As blood sugar and insulin levels decrease, the receptors empty and the glucose transporters go back into the cell.

Insulin and Type 2 Diabetes

In a perfect situation, glucose from carbohydrates gets cleared rapidly. However, when there is insulin resistance, this does not happen, and sustained high glucose levels become a problem. Insulin resistance can be due to a problem with the shape of the insulin (preventing receptor binding), not having enough insulin receptors, signaling problems, or glucose transporters not working properly. Whatever the specific cause, the function of insulin is impaired.

Insulin resistance develops before type 2 diabetes is diagnosed. To make up for less effective insulin, the pancreas works overtime to increase insulin output. Eventually, some of the insulin works and blood sugar levels remain normal for a while. As insulin resistance worsens and the pancreas cannot keep up with the demand, glucose levels begin to rise and diabetes is diagnosed when levels get too high.

How Insulin Affects Fat Metabolism

Carbohydrate and fat metabolism are closely connected and both influenced by insulin. If insulin is not working properly, problems can occur. For example, high levels of insulin can send the wrong signals to the brain. These signals tell the brain that there is excess insulin and that your cells are starving for glucose. So in response, your brain creates cravings for carbohydrates, signals your body to store fat, and orders carbs to be burned for energy rather than body fat. This is why weight loss can be difficult when you have type 2 diabetes.

Insulin also plays a key role in the development of high triglyceride levels:

• In the Liver: Insulin stimulates the creation and storage of glycogen from glucose. High insulin levels cause the liver to get saturated with glycogen. When this happens, the liver resists further storage. Glucose is used instead to create fatty acids that are converted into lipoproteins and released into the bloodstream. These break down into free fatty acids and are used in other tissues. Some tissues use these to create triglycerides.
• In Fat Cells: Insulin stops the breakdown of fat and prevents the breakdown of triglycerides into fatty acids. When glucose enters these cells, it can be used to create a compound called glycerol. Glycerol can be used along with the excess free fatty acids from the liver to make triglycerides. This can cause triglycerides to build up in the fat cells.