The effect of chronic physiologic hyperglucagonemia on basal and insulin-mediated glucose metabolism was evaluated in normal subjects, using the euglycemic insulin clamp technique (+50, +100, and +500 microU/ml). After glucagon infusion fasting glucose increased from 76 +/- 4 to 93 +/- 2 mg/dl and hepatic glucose production (HGP) rose from 1.96 +/- 0.08 to 2.25 +/- 0.08 mg/kg X min (P less than 0.001). Basal glucose oxidation after glucagon increased (P less than 0.05) and correlated inversely with decreased free fatty acid concentrations (r = -0.94; P less than 0.01) and decreased lipid oxidation (r = -0.75; P less than 0.01). Suppression of HGP and stimulation of total glucose disposal were impaired at each insulin step after glucagon (P less than 0.05-0.01). The reduction in insulin-mediated glucose uptake was entirely due to diminished non-oxidative glucose utilization. Glucagon infusion also caused a decrease in basal lipid oxidation and an enhanced ability of insulin to inhibit lipid oxidation and augment lipid synthesis. These results suggest that hyperglucagonemia may contribute to the disturbances in glucose and lipid metabolism in some diabetic patients.