Subjects with poorly controlled type 2 diabetes are both hyperglycemic and insulin resistant. To determine whether short term restoration of normoglycemia improves insulin action, hyperinsulinemic (~300 pmol/L) euglycemic clamps were performed in diabetic subjects after either overnight infusion of saline or overnight infusion of insulin in amounts sufficient to maintain euglycemia throughout the night. Fasting glucose concentrations (5.2 ± 0.2 vs. 11.9 ± 1.4 mmol/L; P < 0.01) and rates of endogenous glucose production (13.0 ± 1.1 vs. 18.6 ± 1.6 μmol/kg · min; P < 0.05) were both lower after overnight insulin than overnight saline. Insulin-induced stimulation of glucose uptake (to 34.9 ± 6.8 vs. 28.8 ± 3.4 μmol/kg · min; P = 0.2) and inhibition of free fatty acids (to 0.13 ± 0.03 vs. 0.12 ± 0.04 mmol/L; P = 0.6) did not differ after overnight saline and overnight insulin. In contrast, endogenous glucose production during the final hour of the hyperinsulinemic clamps (i.e. when glucose concentrations were the same) remained higher (P = 0.05) after overnight saline than after overnight insulin (5.5 ± 1.5 vs. 0.02 ± 1.4 μmol/kg · min). Thus, acute restoration of euglycemia by means of an overnight insulin infusion improves hepatic (and perhaps renal) but not extrahepatic insulin action.