The mechanism of increased hepatic glucose production in obese non-insulin-dependent diabetic (NIDDM) patients is unknown. The New Zealand Obese (NZO) mouse, a polygenic model of obesity and NIDDM shows increased hepatic glucose production. To determine the mechanism of this phenomenon, we measured gluconeogenesis from U-14C-glycerol and U-14C-alanine and relevant gluconeogenic enzymes. Gluconeogenesis from glycerol (0.07 +/- 0.01 vs 0.21 +/- 0.02 micromol.min-1.body mass index (BMI)-1, p < 0.005) and alanine (0.57 +/- 0.07 vs 0.99 +/- 0.07 micromol.min-1.BMI-1, p < 0.005) was elevated in control mice NZO vs as was glycerol turnover (0.25 +/- 0.02 vs 0.63 +/- 0.09 micromol.min-1.BMI-1, p < 0.05). Fructose 1,6-bisphosphatase activity (44.2 +/- 1.9 vs 55.7 +/- 4.1 nmol.min-1.mg protein-1, p < 0.05) and protein levels (6.9 +/- 1.1 vs 16.7 +/- 2.3 arbitrary units, p < 0.01) were increased in NZO mouse livers, as was the activity of pyruvate carboxylase (0.12 +/- 0.01 vs 0.17 +/- 0.02 nmol.min-1.mg protein-1, p < 0.05). To ascertain whether elevated lipid supply is responsible for these biochemical changes in NZO mice, we fed lean control mice a 60% fat diet for 2 weeks. Fat-fed mice were hyperinsulinaemic (76.37 +/- 4.06 vs 98.00 +/- 7.07 pmol/l, p = 0.05) and had elevated plasma non-esterified fatty acid levels (0.44 +/- 0.05 vs 0.59 +/- 0.03 mmol/l, p = 0.05). Fructose 1,6-bisphosphatase activity (43.86 +/- 2.54 vs 52.93 +/- 3.09 nmol.min-1.mg protein-1, p = 0.05) and protein levels (33.03 +/- 0.96 vs 40.04 +/- 1.26 arbitrary units, p = 0.005) and pyruvate carboxylase activity (0.10 +/- 0.003 vs 0.14 +/- 0.01 nmol.min-1.mg protein-1, p < 0.05) were elevated in fat-fed mice. We conclude that in NZO mice increased hepatic glucose production is due to elevated lipolysis resulting from obesity.