Increased availability of free fatty acids (FFA) may play a role in the pathogenesis of insulin resistance in the liver. We examined the effects of an antilipolytic nicotinic acid analog (acipimox) on hepatic glucose metabolism in basal and hyperinsulinemic states in normal rats. Acipimox decreased plasma FFA levels profoundly and enhanced the ability of insulin to suppress hepatic glucose production (HGP) and to stimulate peripheral glucose utilization. In the basal state, acipimox inhibited hepatic gluconeogenesis. However, this inhibition was not associated with the change in overall HGP due to the compensatory increase in hepatic glycogenolysis that might occur as a consequence of decreased hepatic glucose-6-phosphate (G-6-P) and/or plasma insulin levels with acipimox. These results support the contention that FFA are an important determinant of insulin action in the liver, and suggest the existence of intrahepatic autoregulatory and/or hormonal regulatory processes for constant HGP in the basal state.