Inhibition of fatty acid (FA) oxidation has been shown previously to lower blood glucose levels acutely in diabetic rats. However, the longer term effects of FA oxidation inhibition have not been determined. This study examines the effect of inhibition of (FA) oxidation for 3 weeks on carbohydrate metabolism in rats rendered diabetic with streptozotocin (STZ). STZ treated rats (50 mg/kg) were randomized into 3 groups: a non-treated diabetic group and 2 groups treated with either 12.5 or 25 mg/kg/day Etomoxir (a specific carnitine palmitoyl transferase inhibitor) for 3 weeks. The 3 groups of rats had ad libitum access to a high fat diet (50% energy fat, 30% carbohydrate and 20% protein) throughout the study. After 3 weeks hepatic glucose production (HGP) was estimated using a constant infusion of (3H)-6-glucose in-vivo after an overnight fast. Inhibition of FA oxidation in diabetic rats resulted in a significant reduction in fasting glucose levels and hepatic glucose production. In addition, experiments with adipocytes isolated from diabetic rats treated with etomoxir demonstrated an increase in sensitivity and responsiveness to insulin of glucose utilization and pyruvate dehydrogenase (PDH) activity. It is important to note that these improvements in carbohydrate metabolism were not accompanied by increases in circulating FFA or triglyceride levels which were unchanged or lower after inhibition of FA oxidation.