Background: Obesity has emerged as one of the most serious public health concerns in the twenty-first century. Currently, bariatric surgeries are considered to be the only successful, long-term therapy available for weight loss in morbid obese subjects. Recent research has focused on sleeve gastrectomy (SG) as a “cure” for comorbid conditions like diabetes mellitus. Materials and methods: This hospital-based prospective study was conducted in 50 morbid obese subjects with type 2 diabetes mellitus (T2DM) aged 20–40 years to evaluate glycemic indices and insulin resistance before and after SG at 9 and 12 weeks. Fasting plasma glucose was estimated using the glucose oxidase peroxidase method and serum insulin by the electrochemiluminescence method in automated analyzers. Insulin resistance was calculated using the homeostatic model assessment of insulin resistance (HOMA-IR) calculator. Data analysis was done using SPSS ver. 18 employing the ANOVA and Tukey's post hoc test. Results: A total of 50 cases were included in the study (19 women, 31 men; aged 20–40 years; duration of diabetes <10 years). Fasting plasma glucose and HOMA-IR decreased significantly (p < 0.05) at 9 and 12 weeks follow-up after SG. Conclusion: The present study conducted in morbid obese patients with T2DM highlights the fact that SG procedure showed early beneficial effects on the glycemic status as well as an improvement in the insulin sensitivity rather than an increased insulin secretion. Clinical significance: The improved glycemic status in this study along with an understanding of the underlying mechanisms could not only provide an insight into the pathophysiology of “diabesity” but also assist in the development of a better therapeutic approach for long-term remission of diabetes in obese patients.