A 68-year-old female with mild diabetes mellitus was admitted because of acute liver dysfunction due to autoimmune hepatitis. While 40 mg/day of prednisolone improved hepatic dysfunction dramatically, her diabetic milieu deteriorated seriously. The induced hyperglycaemia could not be controlled sufficiently, despite a high dose of insulin (> 110 units/day), suggesting the existence of insulin insensitivity and hyperinsulinaemia. Soon after introduction of insulin therapy, she developed severe anasarca, including marked peripheral oedema, ascites and pleural effusion. Anasarca eventually subsided within 4 weeks with the use of a diuretic agent. We conjectured that the side effects of insulin, such as anti-natriuresis and increased vascular permeability, might be pronounced in the presence of the hepatic dysfunction that accompanies insulin insensitivity, hyperinsulinaemia and hypoalbuminaemia.