Epidemiologic studies and meta-analyses have suggested that patients with type 2 diabetes mellitus (T2DM) have a higher incidence of malignancies, including myeloma. Metformin is a widely prescribed antidiabetic drug. Recently, researchers have shown that metformin has direct anticancer activity against many tumor cell lines, mainly through activating AMP-activated protein kinase (AMPK) or reducing the blood insulin level. In the present study, we investigated whether metformin exerts an anti-myeloma effect in vitro and in vivo xenograft models and explored the underlying mechanism. We found that metformin can inhibit proliferation of MM cells by inducing apoptosis and cell cycle arrest in the G0/G1 phase. Western blot showed that metformin activated caspase 3, caspase 9, PARP-1, Bak, and p21 and inactivated Mcl-1, HIAP-1, cyclin D1, CDK4, and CDK6. Metformin inhibited the expression of insulin growth factor-I receptor (IGF-IR), and phosphatidyl inositol 3-kinase (PI3K), protein kinase B (PKB/AKT) and the downstream mammalian target of rapamycin (mTOR). IGF-I blocked metformin-induced MM cell apoptosis and reactivation of the PI3K/AKT/mTOR signaling pathway. Metformin also demonstrated synergistic activity with dexamethasone but not bortezomib to eradicate MM cells in vitro and in vivo, especially in MM.1S cells. We conclude that metformin inhibits MM cell proliferation through the IGF-1R/PI3K/AKT/mTOR signaling pathway. Metformin and dexamethasone combination therapy may be an option for MM treatment.