The effect of short-term (8-10 days) optimal glycaemic control achieved by continuous subcutaneous insulin infusion on resting energy expenditure and food-induced thermogenesis was studied. Oxygen consumption and carbon dioxide production were measured by indirect calorimetry in six newly-diagnosed and six chronically-treated diabetic children before and following the consumption of a standardized test meal. The metabolic and hormonal responses to the test meal and nutrient utilization were also assessed and compared with those measured in nine non-diabetic children. The restoration of normoglycaemia was accompanied by hypoglucagonaemia, hypoketonaemia, increased insulin:glucagon ratio and abnormal postmeal fall in free fatty acid levels in spite of normal fasting and post-prandial plasma free insulin levels. These changes suggesting increased insulin action were most pronounced in newly-diagnosed diabetic children. Possibly as a result of increased insulin action high carbohydrate, low fat utilization and increased food-induced thermogenesis were observed in the newly-diagnosed diabetic children. In the chronically-treated group these parameters were approaching the normal. Resting energy expenditure was normal in both groups of diabetics. These findings suggest that precise glycaemic control can be achieved only at the expense of some degree of peripheral hyperinsulinisation which leads to altered nutrient utilization and food-induced thermogenesis in the newly-diagnosed diabetic children.