To investigate the sites of the free fatty acid (FFA) effects to increase basal hepatic glucose production and to impair hepatic insulin action, we performed 2-h and 7-h Intralipid + heparin (IH) and saline infusions in the basal fasting state and during hyperinsulinemic clamps in overnight-fasted rats. We measured endogenous glucose production (EGP), total glucose output (TGO, the flux through glucose-6-phosphatase), glucose cycling (GC, index of flux through glucokinase = TGO − EGP), hepatic glucose 6-phosphate (G-6-P) content, and hepatic glucose-6-phosphatase and glucokinase activities. Plasma FFA levels were elevated about threefold by IH. In the basal state, IH increased TGO, in vivo glucose-6-phosphatase activity (TGO/G-6-P), and EGP (P < 0.001). During the clamp compared with the basal experiments, 2-h insulin infusion increased GC and in vivo glucokinase activity (GC/TGO; P < 0.05) and suppressed EGP (P< 0.05) but failed to significantly affect TGO and in vivo glucose-6-phosphatase activity. IH decreased the ability of insulin to increase GC and in vivo glucokinase activity (P < 0.01), and at 7 h, it also decreased the ability of insulin to suppress EGP (P < 0.001). G-6-P content was comparable in all groups. In vivo glucose-6-phosphatase and glucokinase activities did not correspond to their in vitro activities as determined in liver tissue, suggesting that stable changes in enzyme activity were not responsible for the FFA effects. The data suggest that, in overnight-fasted rats, FFA increased basal EGP and induced hepatic insulin resistance at different sites. 1) FFA increased basal EGP through an increase in TGO and in vivo glucose-6-phosphatase activity, presumably due to a stimulatory allosteric effect of fatty acyl-CoA on glucose-6-phosphatase.2) FFA induced hepatic insulin resistance (decreased the ability of insulin to suppress EGP) through an impairment of insulin's ability to increase GC and in vivo glucokinase activity, presumably due to an inhibitory allosteric effect of fatty acyl-CoA on glucokinase and/or an impairment in glucokinase translocation.