To elucidate cellular mechanisms of insulin resistance induced by excess dietary fat, we studied conscious chronically high-fat-fed (HFF) and control chow diet-fed rats during euglycemic-hyperinsulinemic (560 pmol/l plasma insulin) clamps. Compared with chow diet feeding, fat feeding significantly impaired insulin action (reduced whole body glucose disposal rate, reduced skeletal muscle glucose metabolism, and decreased insulin suppressibility of hepatic glucose production [HGP]). In HFF rats, hyperinsulinemia significantly suppressed circulating free fatty acids but not the intracellular availability of fatty acid in skeletal muscle (long chain fatty acyl-CoA esters remained at 230% above control levels). In HFF animals, acute blockade of beta-oxidation using etomoxir increased insulin-stimulated muscle glucose uptake, via a selective increase in the component directed to glycolysis, but did not reverse the defect in net glycogen synthesis or glycogen synthase. In clamp HFF animals, etomoxir did not significantly alter the reduced ability of insulin to suppress HGP, but induced substantial depletion of hepatic glycogen content. This implied that gluconeogenesis was reduced by inhibition of hepatic fatty acid oxidation and that an alternative mechanism was involved in the elevated HGP in HFF rats. Evidence was then obtained suggesting that this involves a reduction in hepatic glucokinase (GK) activity and an inability of insulin to acutely lower glucose-6-phosphatase (G-6-Pase) activity. Overall, a 76% increase in the activity ratio G-6-Pase/GK was observed, which would favor net hepatic glucose release and elevated HGP in HFF rats. Thus in the insulin-resistant HFF rat 1) acute hyperinsulinemia fails to quench elevated muscle and liver lipid availability, 2) elevated lipid oxidation opposes insulin stimulation of muscle glucose oxidation (perhaps via the glucose-fatty acid cycle) and suppression of hepatic gluconeogenesis, and 3) mechanisms of impaired insulin-stimulated glucose storage and HGP suppressibility are not dependent on concomitant lipid oxidation; in the case of HGP we provide evidence for pivotal involvement of G-6-Pase and GK in the regulation of HGP by insulin, independent of the glucose source.