PurposeMetformin is widely used to treat type 2 diabetes mellitus (T2DM) individuals. Clinically, inter-individual variability of metformin response is of significant concern and is under interrogation. In this study, a targeted exome and whole transcriptome analysis were performed to identify predictive biomarkers of metformin response in drug-naïve T2DM individuals.MethodsThe study followed a prospective study design. Drug-naïve T2DM individuals (n= 192) and controls (n= 223) were enrolled. T2DM individuals were administered with metformin monotherapy and defined as responders and non-responders based on their glycated haemoglobin change over three months. 146 T2DM individuals were used for the final analysis and remaining samples were lost during the follow-up. Target exome sequencing and RNA-seq was performed to analyze genetic and transcriptome profile. The selected SNPs were validated by genotyping and allele specific gene expression using the TaqMan assay. The gene prioritization, enrichment analysis, drug-gene interactions, disease-gene association, and correlation analysis were performed using various tools and databases.Resultsrs1050152 and rs272893 inSLC22A4were associated with improved response to metformin. The copy number loss was observed inPPARGC1Ain the non-responders. The expression analysis highlighted potential differentially expressed targets for predicting metformin response (n= 35) and T2DM (n= 14). The expression ofGDF15, TWISTNB,andRPL36Agenes showed a maximum correlation with the change in HbA1c levels. The disease-gene association analysis highlightedMAGI2rs113805659 to be linked with T2DM.ConclusionThe results provide evidence for the genetic variations, perturbed transcriptome, allele-specific gene expression, and pathways associated with metformin drug response in T2DM.Supplementary InformationThe online version contains supplementary material available at 10.1007/s40618-022-01989-y.