The relationships between insulin secretion, insulin action, and fasting plasma glucose concentration (FPG) were examined in 34 southwest American Indians (19 nondiabetics, 15 noninsulin-dependent diabetics) who had a broad range of FPG (88-310 mg/100 ml). Fasting, glucose-stimulated, and meal-stimulated plasma insulin concentrations were negatively correlated with FPG in diabetics but not in nondiabetics. In contrast, fasting and glucose-stimulated plasma C-peptide concentrations did not decrease with increasing FPG in either group and 24-h urinary C-peptide excretion during a diet of mixed composition was positively correlated with FPG for all subjects (r = 0.36, P less than 0.05). Fasting free fatty acid (FFA) was correlated with FPG in nondiabetics (r = 0.49, P less than 0.05) and diabetics (r = 0.77, P less than 0.001). Fasting FFA was also correlated with the isotopically determined endogenous glucose production rate in the diabetics (r = 0.54, P less than 0.05). Endogenous glucose production was strongly correlated with FPG in the diabetics (r = 0.90, P less than 0.0001), but not in the nondiabetics. Indirect calorimetry showed that FPG was also negatively correlated with basal glucose oxidation rates (r = -0.61, P less than 0.001), but positively with lipid oxidation (r = 0.74, P less than 0.001) in the diabetics. Insulin action was measured as total insulin-mediated glucose disposal, glucose oxidation, and storage rates, using the euglycemic clamp with simultaneous indirect calorimetry at plasma insulin concentrations of 135 +/- 5 and 1738 +/- 59 microU/ml. These parameters of insulin action were significantly, negatively correlated with FPG in the nondiabetics at both insulin concentrations, but not in the diabetics although all the diabetics had markedly decreased insulin action. We conclude that decreased insulin action is present in the noninsulin-dependent diabetics in this population and marked hyperglycemia occurs with the addition of decreased peripheral insulin availability. Decreased peripheral insulin availability leads to increased FFA concentrations and lipid oxidation rates (and probably also increased concentrations of gluconeogenic precursors) that together stimulate gluconeogenesis, hepatic glucose production, and progressive hyperglycemia.