Abstract This study was undertaken to elucidate the mechanism(s) involved in glucocorticoid-induced insulin antagonism. Male Sprague-Dawley rats (200 to 210 g) were injected with 1 mg/kg dexamethasone-phosphate (Dex) or the vehicle every other day for 10 days. Two days after the last injection, fasted anesthetized animals were infused (per kg body weight per min) with 8 mg glucose, 5 mU porcine insulin and 1.4 μg somatostatin with blood sampling before, and at 10 min intervals between 90 and 130 min after the pancreatic suppression test was begun. At the end of the test, abdominal muscle was quickly freeze-clamped and the substrates and products of the rate-determining reactions of glycolysis and glycogenesis were measured. Dex-treated rats had higher basal (0 min) and steady-state levels (90–130 min) of both glucose and insulin signifying insulin antagonism. The pattern of muscle tissue metabolites revealed no free intracellular glucose in either group and concentrations of all other metabolites in the Dex-treated rats were less than those in the control animals (except for a small increase in glycogen). These results suggest a site of insulin antagonism between (and including) insulin binding and glucose transport. Further studies in the Dex-treated rats revealed normal: a) insulin binding to freshly isolated hepatocytes; b) basal and insulin-stimulated xylose transport in soleus muscle; c) basal and insulin-stimulated glucose uptake in hemidiaphragms. These normal in-vitro results suggested that a circulating factor may be responsible. Repeat pancreatic suppression tests in the Dex-treated rats revealed blunted suppression of serum FFA concentrations. Epididymal fat pads from Dex-treated animals had increased basal lipolysis and normal submaximally stimulated lipolysis by epinephrine (10 −6 mol/L), but were almost completely refractory to the anti-lipolytic effect of sub-maximal concentrations of insulin (25 μU/mL). FFA oxidation by hemidiaphragms from the Dex-treated rats was also significantly increased. Insulin (0.2 U/kg)-glucose (0.7 g/kg) tolerance tests revealed decreased glucose disappearance rates in the Dex group. These values were restored to normal when FFA levels were lowered before the test by nicotinic acid. These data suggest a role for the glucose-fatty acid cycle in the insulin antagonism induced by glucocorticoid administration.