Hepatic glucose production and peripheral glucose utilization were measured basally and during infusion of insulin (25 and 40 m U X kg-1 X h-1) in normal dogs and in insulin-deficient diabetic dogs, before and after a 10-14 day period of insulin treatment. Basal hepatic glucose production was significantly raised in the diabetic dogs (21.4 +/- 2.5 mumol X kg-1. min-1; p less than 0.005) compared with normal dogs (11.9 +/- 2.5 mumol X kg-1 X min-1) and fell by 20% in diabetic dogs following insulin treatment (17.4 +/- 3.0 mumol X kg-1 X min-1). However, in all groups, hepatic glucose production suppressed equally well during the low dose insulin infusions, suggesting that the raised hepatic glucose production of diabetes is due to insulin deficiency and not hepatic insulin resistance. In addition, a marked defect of glucose utilization was found in the diabetic dogs (25 +/- 5 mumol X kg-1 X min-1; p less than 0.001) compared with normal dogs (99 +/- 15 mumol X kg-1 X min-1) during matched hyperinsulinaemia and hyperglycaemia. This defect of glucose utilization, as defined by euglycaemic insulin dose-response curves employing insulin infusion rates between 40-600 mU X kg-1 X h-1, demonstrated a marked reduction of glucose disposal in diabetic dogs. The severity of the insulin resistance closely paralleled the degree of hyperglycaemia. In contrast, following 10-14 days of insulin treatment, an improvement of glucose disposal was seen in all diabetic dogs. It is concluded that insulin deficiency leads to (a) increased hepatic glucose production, and (b) the development of marked peripheral insulin resistance, which is reversed by insulin treatment.