Fourteen male patients with Type 2 diabetes were studied to identify relationships between insulin‐mediated glucose disposal, basal and glucose‐stimulated insulin secretion, fasting lipoproteins and apolipoproteins, and the activities of lipoprotein lipase and hepatic lipase. Sensitivity of glucose disposal to exogenous insulin correlated positively with HDL‐cholesterol (r=0.65, p<0.05), HDL₂‐cholesterol (r=0.59, p<0.05), and apolipoprotein A₁ (r=0.57, p<0.05) and negatively with apolipoprotein B (r=‐0.53, p<0.05) and total: HDL‐cholesterol ratio (r=‐0.68, p<0.01). Fasting C‐peptide correlated negatively with HDL‐cholesterol (r=‐0.76, p<0.01), HDL₂‐cholesterol (r= −0.80, p<0.001) and apoprotein A₁ (r=‐0.56, p<0.05) and positively with total:HDL‐cholesterol ratio (r=0.64, p<0.05). Neither fasting plasma glucose nor the indices of stimulated insulin secretion (glucose‐stimulated plasma insulin and C‐peptide) were related to any of the lipoprotein measures. Insulin insensitivity and hyperinsulinaemia were both associated with higher levels of hepatic lipase activity but did not influence lipoprotein lipase activity. In multiple linear regression analysis, hepatic lipase activity was related to HDL‐cholesterol independent of insulin insensitivity. In addition, fasting C‐peptide alone accounted for 70 % of the variance in hepatic lipase activity and this was independent of insulin sensitivity and body mass index. We propose that the abnormalities of HDL‐cholesterol in Type 2 diabetes are closely related to enhanced hepatic lipase activity brought about by increased insulin secretion which, in turn, is secondary to the defect in insulin action.