The liver plays an important role in insulin-regulated glucose homoeostasis. To study the function of the PDK1 (3-phosphoinositide-dependent protein kinase-1) signalling pathway in mediating insulin's actions in the liver, we employed CRE recombinase/loxP technology to generate L(liver)-PDK1-/- mice, which lack expression of PDK1 in hepatocytes and in which insulin failed to induce activation of PKB in liver. The L-PDK1-/- mice were not insulin-intolerant, possessed normal levels of blood glucose and insulin under normal feeding conditions, but were markedly glucose-intolerant when injected with glucose. The L-PDK1-/- mice also possessed 10-fold lower levels of hepatic glycogen compared with control littermates, and were unable to normalize their blood glucose levels within 2 h after injection of insulin. The glucose intolerance of the L-PDK1-/- mice may be due to an inability of glucose to suppress hepatic glucose output through the gluconeogenic pathway, since the mRNA encoding hepatic PEPCK (phosphoenolpyruvate carboxykinase), G6Pase (glucose-6-phosphatase) and SREBP1 (sterol-regulatory-element-binding protein 1), which regulate gluconeogenesis, are no longer controlled by feeding. Furthermore, three other insulin-controlled genes, namely IGFBP1 (insulin-like-growth-factor-binding protein-1), IRS2 (insulin receptor substrate 2) and glucokinase, were regulated abnormally by feeding in the liver of PDK1-deficient mice. Finally, the L-PDK1-/- mice died between 4-16 weeks of age due to liver failure. These results establish that the PDK1 signalling pathway plays an important role in regulating glucose homoeostasis and controlling expression of insulin-regulated genes. They suggest that a deficiency of the PDK1 pathway in the liver could contribute to development of diabetes, as well as to liver failure.