Glucagon may play a role in the metabolic derangements of overt Type 2 (non-insulin-dependent) diabetes mellitus. We therefore have evaluated the early steps in glucagon action by investigating the hormone-sensitive adenylyl cyclase system in liver membranes from seven Type 2 diabetic patients with fasting hyperglycaemia and two-fold elevations in plasma glucagon. The comparison was made with seven control subjects matched for age, sex and body weight. Glucagon receptor binding was almost identical in the two groups. There were, however, marked alterations in the adenylyl cyclase activity in membranes from the diabetic patients. This activity was reduced by 35-50% when compared to control activity. Basal cyclase activity, as well as the activity after stimulation with glucagon or with agents (i.e., sodium fluoride and forskolin) that act beyond the glucagon receptor, was significantly decreased (p less than 0.05, p less than 0.001 respectively). In conclusion, uncontrolled Type 2 diabetes in associated with an over-all loss of responsiveness of the hormone-sensitive adenylyl cyclase in human liver, which apparently results from post-receptor alterations. This change may provide a mechanism for reducing the effect of hyperglycagonaemia in Type 2 diabetes mellitus.