A fatty liver is associated with fasting hyperinsulinemia, which could reflect either impaired insulin clearance or hepatic insulin action. We determined the effect of liver fat on insulin clearance and hepatic insulin sensitivity in 80 nondiabetic subjects [age 43 +/- 1 yr, body mass index (BMI) 26.3 +/- 0.5 kg/m(2)]. Insulin clearance and hepatic insulin resistance were measured by the euglycemic hyperinsulinemic (insulin infusion rate 0.3 mU.kg(-1).min(-1) for 240 min) clamp technique combined with the infusion of [3-(3)H]glucose and liver fat by proton magnetic resonance spectroscopy. During hyperinsulinemia, both serum insulin concentrations and increments above basal remained approximately 40% higher (P < 0.0001) in the high (15.0 +/- 1.5%) compared with the low (1.8 +/- 0.2%) liver fat group, independent of age, sex, and BMI. Insulin clearance (ml.kg fat free mass(-1).min(-1)) was inversely related to liver fat content (r = -0.52, P < 0.0001), independent of age, sex, and BMI (r = -0.37, P = 0.001). The variation in insulin clearance due to that in liver fat (range 0-41%) explained on the average 27% of the variation in fasting serum (fS)-insulin concentrations. The contribution of impaired insulin clearance to fS-insulin concentrations increased as a function of liver fat. This implies that indirect indexes of insulin sensitivity, such as homeostatic model assessment, overestimate insulin resistance in subjects with high liver fat content. Liver fat content correlated significantly with fS-insulin concentrations adjusted for insulin clearance (r = 0.43, P < 0.0001) and with directly measured hepatic insulin sensitivity (r = -0.40, P = 0.0002). We conclude that increased liver fat is associated with both impaired insulin clearance and hepatic insulin resistance. Hepatic insulin sensitivity associates with liver fat content, independent of insulin clearance.