Glucagon stimulates gluconeogenesis in part by decreasing the rate of phosphoenolpyruvate disposal by pyruvate kinase. Glucagon, via cyclic AMP (cAMP) and the cAMP-dependent protein kinase, enhances phosphorylation of pyruvate kinase, phosphofructokinase, and fructose-1, 6-bisphosphatase. Phosphorylation of pyruvate kinase results in enzyme inhibition and decreased recycling of phosphoenolpyruvate to pyruvate and enhanced glucose synthesis. Although phosphorylation of 6-phosphofructo 1-kinase and fructose-1, 6-bisphosphatase is catalyzed in vitro by the cAMP-dependent protein kinase, the role of phosphorylation in regulating the activity of and flux through these enzymes in intact cells is uncertain. Glucagon regulation of these two enzyme activities is brought about primarily by changes in the level of a novel sugar diphosphate, fructose 2, 6-bisphosphate. This compound is an activator of phosphofructokinase and an inhibitor of fructose-1, 6-bisphosphatase; it also potentiates the effect of AMP on both enzymes. Glucagon addition to isolated liver systems results in a greater than 90% decrease in the level of this compound. This effect explains in large part the effect of glucagon to enhance flux through fructose-1, 6-bisphosphatase and to suppress flux through phosphofructokinase. The discovery of fructose 2, 6-bisphosphate has greatly furthered our understanding of regulation at the fructose 6-phosphate/fructose 1, 6-bisphosphate substrate cycle.