The mechanism by which the consumption of high fat, low carbohydrate diets impair glucose tolerance and decrease insulin sensitivity is poorly understood. In an attempt to clarify this question, intravenous glucose tolerance and insulin action in the liver and skeletal muscle were examined in rats after two weeks feeding of either a high fat (HF: 66% energy as fat) or a low fat (LF: 12% energy as fat) diet. Both diets had a P/S ratio (ratio of polyunsaturated to saturated fat in the diet) of 1.3. The high fat diet resulted in mild impairment of intravenous glucose tolerance. Postprandial glucose levels were elevated in the presence of a sustained insulin response. In vitro insulin-stimulated glucose utilisation was decreased significantly in soleus muscle of HF rats, as indicated by decreased [14C]glucose incorporation into muscle glycogen. In contrast, muscle lipogenesis from glucose was not affected by dietary composition. There was no difference in insulin binding to soleus muscle of HF and LF rats, indicating a dissociation between insulin receptor binding and post-receptor metabolic events. Dietary composition did not influence the incorporation of increasing [14C]glucose loads into muscle glycogen or lipid in vivo. However, the HF diet was associated with reduced incorporation of [14C]glucose into lipids and glycogen in the liver and, to a smaller extent, reduced incorporation into adipose tissue lipids in vivo. These results suggest that the mechanism by which HF diets impaired glucose tolerance was mainly hepatic in origin. Decreased glucose uptake, secondary to reduced glucokinase activity, may result in a reduction in glucose utilisation in the liver.