We examined the ability of an equivalent increase in circulating glucose concentrations to inhibit endogenous glucose production (EGP) and to stimulate glucose metabolism in patients with Type 2 diabetes mellitus (DM2). Somatostatin was infused in the presence of basal replacements of glucoregulatory hormones and plasma glucose was maintained either at 90 or 180 mg/dl. Overnight low-dose insulin was used to normalize the plasma glucose levels in DM2 before initiation of the study protocol. In the presence of identical and constant plasma insulin, glucagon, and growth hormone concentrations, a doubling of the plasma glucose levels inhibited EGP by 42% and stimulated peripheral glucose uptake by 69% in nondiabetic subjects. However, the same increment in the plasma glucose concentrations failed to lower EGP, and stimulated glucose uptake by only 49% in patients with DM2. The rate of glucose infusion required to maintain the same hyperglycemic plateau was 58% lower in DM2 than in nondiabetic individuals. Despite diminished rates of total glucose uptake during hyperglycemia, the ability of glucose per se (at basal insulin) to stimulate whole body glycogen synthesis (glucose uptake minus glycolysis) was comparable in DM2 and in nondiabetic subjects. To examine the mechanisms responsible for the lack of inhibition of EGP by hyperglycemia in DM2 we also assessed the rates of total glucose output (TGO), i.e., flux through glucose-6-phosphatase, and the rate of glucose cycling in a subgroup of the study subjects. In the nondiabetic group, hyperglycemia inhibited TGO by 35%, while glucose cycling did not change significantly. In DM2, neither TGO or glucose cycling was affected by hyperglycemia. The lack of increase in glucose cycling in the face of a doubling in circulating glucose concentrations suggested that hyperglycemia at basal insulin inhibits glucose-6-phosphatase activity in vivo. Conversely, the lack of increase in glucose cycling in the presence of hyperglycemia and unchanged TGO suggest that the increase in the plasma glucose concentration failed to enhance the flux through glucokinase in DM2. In summary, both lack of inhibition of EGP and diminished stimulation of glucose uptake contribute to impaired glucose effectiveness in DM2. The abilities of glucose at basal insulin to both increase the flux through glucokinase and to inhibit the flux through glucose-6-phosphatase are impaired in DM2. Conversely, glycogen synthesis is exquisitely sensitive to changes in plasma glucose in patients with DM2.