Visceral fat (VF) excess has been associated with decreased peripheral insulin sensitivity and has been suggested to contribute to hepatic insulin resistance. However, the mechanisms by which VF impacts on hepatic glucose metabolism and the quantitative role of VF in glycemic control have not been investigated. In the present study 63 type 2 diabetic subjects (age, 55 ± 1 yr; fasting plasma glucose, 5.5–14.4 mmol/liter; hemoglobin A_1c, 6.1–11.7%) underwent measurement of 1) fat-free mass (³H₂O technique), 2) sc and visceral abdominal fat area (magnetic resonance imaging), 3) insulin sensitivity (euglycemic insulin clamp), 4) endogenous glucose output ([³H]glucose infusion technique), and 5) gluconeogenesis (²H₂O method). After adjustment for sex, age, body mass index, diabetes duration, ethnicity, and sc fat area, VF area was positively related to fasting hyperglycemia (partial r = 0.46; P = 0.001) as well as to hemoglobin A_1c (partial r = 0.50; P = 0.0003). Insulin sensitivity was reciprocally related to VF independently of body mass index (partial r = 0.33; P = 0.01). In contrast, the relation of basal endogenous glucose output to VF was not statistically significant. This lack of association was explained by the fact that VF was positively associated with gluconeogenesis flux (confounder-adjusted, partial r = 0.45; P = 0.003), but was reciprocally associated with glycogenolysis (partial r = 0.31; P < 0.05). We conclude that in patients with established type 2 diabetes, VF accumulation has a significant negative impact on glycemic control through a decrease in peripheral insulin sensitivity and an enhancement of gluconeogenesis.