Gluconeogenesis (GNG) is enhanced in type 2 diabetes. In experimental animals, insulin at high doses decreases the incorporation of labeled GNG precursors into plasma glucose. Whether physiological hyperinsulinemia has any effect on total GNG in humans has not been determined. We combined the insulin clamp with the ²H₂O technique to measure total GNG in 33 subjects with type 2 diabetes (BMI 29.0 ± 0.6 kg/m², fasting plasma glucose 8.1 ± 0.3 mmol/l) and in 9 nondiabetic BMI-matched subjects after 16 h of fasting and after euglycemic hyperinsulinemia. A primed-constant infusion of 6,6-²H-glucose was used to monitor endogenous glucose output (EGO); insulin (40 mU · min⁻¹ · m⁻²) was then infused while clamping plasma glucose for 2 h (at 5.8 ± 0.1 and 4.9 ± 0.2 mmol/l for diabetic and control subjects, respectively). In the fasting state, EGO averaged 15.2 ± 0.4 μmol · min⁻¹ · kg_ffm⁻¹ (62% from GNG) in diabetic subjects and 12.2 ± 0.7 μmol · min⁻¹ · kg_ffm⁻¹ (55% from GNG) in control subjects (P < 0.05 or less for both fluxes). Glycogenolysis (EGO – GNG) was similar in the two groups (P = NS). During the last 40 min of the clamp, both EGO and GNG were significantly (P < 0.01 or less, compared with fasting) inhibited (EGO 7.1 ± 0.9 and 3.6 ± 0.5 and GNG 7.9 ± 0.5 and 4.5 ± 1.0 μmol · min⁻¹ · kg_ffm⁻¹ in diabetic and control subjects, respectively) but remained significantly (P < 0.05) higher in diabetic subjects, whereas glycogenolysis was suppressed completely and equally in both groups. During hyperinsulinemia, GNG was reciprocally related to plasma glucose clearance. In conclusion, physiological hyperinsulinemia suppresses GNG by ∼20%, while completely blocking glycogenolysis. Resistance of GNG (to insulin suppression) and resistance of glucose uptake (to insulin stimulation) are coupled phenomena. In type 2 diabetes, the excess GNG of the fasting state is carried over to the insulinized state, thereby contributing to glucose overproduction under both conditions.