BACKGROUND. Insulin is a key regulator of metabolic function. The effects of excess adiposity, insulin resistance, and hepatic steatosis on the complex integration of insulin secretion and hepatic and extrahepatic tissue extraction are not clear. METHODS. A hyperinsulinemic-euglycemic clamp and a 3-hour oral glucose tolerance test were performed to evaluate insulin sensitivity and insulin kinetics after glucose ingestion in 3 groups: (a) lean subjects with normal intrahepatic triglyceride (IHTG) and glucose tolerance (lean-NL; n = 14), (b) obese subjects with normal IHTG and glucose tolerance (obese-NL; n = 24), and (c) obese subjects with nonalcoholic fatty liver disease (NAFLD) and prediabetes (obese-NAFLD; n = 22). RESULTS. Insulin sensitivity progressively decreased and insulin secretion progressively increased from the lean-NL to the obese-NL to the obese-NAFLD groups. Fractional hepatic insulin extraction progressively decreased from the lean-NL to the obese-NL to the obese-NAFLD groups, whereas total hepatic insulin extraction (molar amount removed) was greater in the obese-NL and obese-NAFLD subjects than in the lean-NL subjects. Insulin appearance in the systemic circulation and extrahepatic insulin extraction progressively increased from the lean-NL to the obese-NL to the obese-NAFLD groups. Total hepatic insulin extraction plateaued at high rates of insulin delivery, whereas the relationship between systemic insulin appearance and total extrahepatic extraction was linear. CONCLUSION. Hyperinsulinemia after glucose ingestion in obese-NL and obese-NAFLD is due to an increase in insulin secretion, without a decrease in total hepatic or extrahepatic insulin extraction. However, the liver's maximum capacity to remove insulin is limited because of a saturable extraction process. The increase in insulin delivery to the liver and extrahepatic tissues in obese-NAFLD is unable to compensate for the increase in insulin resistance, resulting in impaired glucose homeostasis.