We designed an experiment to examine the effect of bile acid sequestration with Colesevelam on fasting and postprandial glucose metabolism in type 2 diabetes. To do so, we tested the hypothesis that Colesevelam increases the disposition index (DI), and this increase is associated with increased glucagon-like peptide-1 (GLP-1) concentrations. Thirty-eight subjects on metformin monotherapy were studied using a double-blind, placebo-controlled, parallel-group design. Subjects were studied before and after 12 weeks of Colesevelam or placebo using a labeled triple-tracer mixed meal to measure the rate of meal appearance (Meal Ra), endogenous glucose production (EGP), and glucose disappearance (Rd). Insulin sensitivity and β-cell responsivity indices were estimated using the oral minimal model and then used to calculate DI. Therapy with Colesevelam was associated with a decrease in fasting (7.0 ± 0.2 vs. 6.6 ± 0.2 mmol/L; P = 0.004) and postprandial glucose concentrations (3,145 ± 138 vs. 2,896 ± 127 mmol/6 h; P = 0.01) in the absence of a change in insulin concentrations. Minimal model–derived indices of insulin secretion and action were unchanged. Postprandial GLP-1 concentrations were not altered by Colesevelam. Although EGP and Rd were unchanged, integrated Meal Ra was decreased by Colesevelam (5,191 ± 204 vs. 5,817 ± 204 μmol/kg/6 h; P = 0.04), suggesting increased splanchnic sequestration of meal-derived glucose.