Ten newly presenting, untreated, Europid Type 2 diabetic patients were studied before and after 8 weeks treatment with intensive diet alone. Nine normal control subjects were also studied. The degree of activation of skeletal muscle glycogen synthase (GS) was used as an intracellular marker of insulin action, prior to and during a 240-min insulin infusion (100 mU kg-1 h-1). Fasting blood glucose decreased from 12.1 +/- 0.9 (+/- SE) to 9.2 +/- 0.8 mmol l-1 (p less than 0.01), but there was no change in fasting insulin concentrations, 9.9 +/- 2.3 vs 9.3 +/- 2.1 mU l-1. Fractional GS activity did not increase in the Type 2 diabetic patients during the insulin infusion either at presentation (change -1.5 +/- 1.9%) or after treatment (change +0.9 +/- 1.8%), and was markedly decreased compared with the control subjects (change +14.5 +/- 2.8%, both p less than 0.001). Glucose requirement during the clamp was decreased in the Type 2 diabetic patients at presentation (2.2 +/- 0.7 vs 7.3 +/- 0.6 mg kg-1 min-1, p less than 0.001), and despite improvement following dietary treatment to 3.3 +/- 0.6 mg kg-1 min-1 (p less than 0.01) remained lower than in the control subjects (p less than 0.001). Fasting plasma non-esterified fatty acid (NEFA) concentrations were elevated at presentation (p less than 0.05), and failed to suppress normally during the insulin infusion. After treatment fasting NEFA concentrations decreased (p less than 0.05) and suppressed normally (p less than 0.05). Insulin secretion was assessed following an intravenous bolus of glucose (0.5 g kg-1) at euglycaemia before and after treatment.(ABSTRACT TRUNCATED AT 250 WORDS)