Glucose, fat, and glucagon availability are increased in diabetes. The normal response of the liver to chronic increases in glucose availability is to adapt to become a marked consumer of glucose. Yet this fails to occur in diabetes. The aim was to determine whether increased glucagon and lipid interact to impair the adaptation to increased glucose availability. Chronically catheterized well controlled depancreatized conscious dogs (n = 21) received 3 days of continuous parenteral nutrition (TPN) that was either high in glucose [C; 75% nonprotein calories (NPC)] or in lipid (HL; 75% NPC) in the presence or absence of a low dose (one-third basal) chronic intraportal infusion of glucagon (GN; 0.25 ng.kg(-1).min(-1)). During the 3 days of TPN, all groups received the same insulin algorithm; the total amount of glucose infused (GIR) was varied to maintain isoglycemia ( approximately 120 mg/dl). On day 3 of TPN, hepatic metabolism was assessed. Glucose and insulin levels were similar in all groups. GIR was decreased in HL and C + GN ( approximately 30%) and was further decreased in HL + GN (55%). Net hepatic glucose uptake was decreased approximately 15% in C + GN, and HL and was decreased approximately 50% in HL + GN. Lipid alone or combined with glucagon decreased glucose uptake by peripheral tissues. Despite impairing whole body glucose utilization, HL did not limit whole body energy disposal. In contrast, glucagon suppressed whole body energy disposal irrespective of the diet composition. In summary, failure to appropriately suppress glucagon secretion adds to the dietary fat-induced impairment in both hepatic and peripheral glucose disposal. In addition, unlike increasing the percentage of calories as fat, inappropriate glucagon secretion in the absence of compensatory hyperinsulinemia limits whole body nutrient disposition.