Insulin resistance is characteristic of the diabetic state. To define the role of hyperglycemia in generation of the insulin resistance, we examined the effect of phlorizin treatment on tissue sensitivity to insulin in partially pancreatectomized rats. Five groups were studied: group I, sham-operated controls; group II, partially pancreatectomized diabetic rats with moderate glucose intolerance; group III, diabetic rats treated with phlorizin to normalize glucose tolerance; group IV, phlorizin-treated controls; and group V, phlorizin-treated diabetic rats restudied after discontinuation of phlorizin. Insulin sensitivity was assessed with the euglyemic hyperinsulinemic clamp technique in awake, unstressed rats. Insulin-mediated glucose metabolism was reduced by approximately 30% (P less than 0.001) in diabetic rats. Phlorizin treatment of diabetic rats completely normalized insulin sensitivity but had no effect on insulin action in controls. Discontinuation of phlorizin in phlorizin-treated diabetic rats resulted in the reemergence of insulin resistance. These data demonstrate that a reduction of beta-cell mass leads to the development of insulin resistance, and correction of hyperglycemia with phlorizin, without change in insulin levels, normalizes insulin sensitivity. These results provide the first in vivo evidence that hyperglycemia per se can lead to the development of insulin resistance.