Whether free fatty acid (FFA) rate of appearance (R_a) is increased in type 2 diabetes is controversial. To characterize nocturnal and postprandial abnormalities in FFA kinetics and to determine the effects of treatment with insulin sensitizers on lipolysis, we measured palmitate R_a in control subjects (n = 6) and individuals with poorly controlled, sulfonylurea-treated type 2 diabetes (HbA_1c = 8.7 ± 0.2%, n = 20), the latter before and at the end of 12 weeks of treatment with troglitazone (600 mg/day, n = 4), metformin (∼2,000 mg/day, n = 8), or placebo (n = 8). Subjects consumed a standard breakfast at 0800 h. Results in control subjects and type 2 diabetic subjects were compared at baseline. Integrated nocturnal FFA R_a (AUC_{1:00–8:00 a.m.}) was ∼50% higher in type 2 diabetic subjects than in control subjects (29.4 ± 3.0 vs. 19.4 ± 3.9 mmol · m⁻² · 7 h⁻¹, respectively, P < 0.05), whereas postprandial palmitate R_a (AUC_{0–240 min}) was almost threefold higher in type 2 diabetic subjects than in control subjects (14.2 ± 1.7 vs. 5.3 ± 1.0 mmol · m⁻² · 4 h⁻¹, respectively, P < 0.01). After troglitazone treatment, nocturnal palmitate R_a did not change, but postprandial palmitate R_a decreased by ∼30% (P < 0.05). Palmitate kinetics did not change with metformin or placebo treatment. In summary, nocturnal and postprandial FFA R_a is increased in type 2 diabetes. Postprandial lipolysis appears to be preferentially improved by thiazolidinediones compared with nocturnal lipolysis.