Insulin resistance and lower muscle quality (strength divided by mass) are hallmarks of type 2 diabetes (T2D). Here, we explore whether alterations in muscle stem cells (myoblasts) from individuals with T2D contribute to these phenotypes. We identify VPS39 as an important regulator of myoblast differentiation and muscle glucose uptake, and VPS39 is downregulated in myoblasts and myotubes from individuals with T2D. We discover a pathway connecting VPS39-deficiency in human myoblasts to impaired autophagy, abnormal epigenetic reprogramming, dysregulation of myogenic regulators, and perturbed differentiation. VPS39 knockdown in human myoblasts has profound effects on autophagic flux, insulin signaling, epigenetic enzymes, DNA methylation and expression of myogenic regulators, and gene sets related to the cell cycle, muscle structure and apoptosis. These data mimic what is observed in myoblasts from individuals with T2D. Furthermore, the muscle of Vps39^+/− mice display reduced glucose uptake and altered expression of genes regulating autophagy, epigenetic programming, and myogenesis. Overall, VPS39-deficiency contributes to impaired muscle differentiation and reduced glucose uptake. VPS39 thereby offers a therapeutic target for T2D.