Metabolic surgery is the most efficacious method for the treatment of morbid obesity and was recently included among the antidiabetes treatments recommended in obese type 2 diabetes (T2D) patients. The aim of this study was to compare in a randomized controlled trial the effect of sleeve gastrectomy (SG) to that of intensive lifestyle intervention plus pharmacologic treatment on some markers of insulin resistance and beta cell function as well as some appetite controlling hormones in a group of male obese T2D subjects. The study groups comprised 20 subjects for SG and 21 control subjects. Fasting blood glucose, insulin, proinsulin, adiponectin, leptin, ghrelin, HOMA-IR, HOMA-%B, proinsulin-to-insulin ratio and proinsulin-to-adiponectin ratio were evaluated at baseline and after one year follow-up. Overall, patients in the SG group lost 78.98% of excess weight loss (%EWL) in comparison with 9.45% in the control group. This was accompanied by a significant improvement of insulin resistance markers, including increase of adiponectin and decrease of HOMA-IR, while no changes were recorded in the control group. Weight loss was also associated with a significant improvement of proinsulin-to-insulin and proinsulin-to-adiponectin ratio, both surrogate markers of beta cell dysfunction. These also improved in the control group, but were only marginally significant. Our findings suggest that improved insulin resistance and decreased beta cell dysfunction after sleeve gastrectomy might explain diabetes remission associated with metabolic surgery.