The mechanisms of the impairment in hepatic glucose metabolism induced by free fatty acids (FFAs) and the importance of FFA oxidation in these mechanisms remain unclear. FFA-induced peripheral insulin resistance has been linked to membrane translocation of novel protein kinase C (PKC) isoforms, but the role of PKC in hepatic insulin resistance has not been assessed. To investigate the biochemical pathways that are induced by FFA in the liver and their relation to glucose metabolism in vivo, we determined endogenous glucose production (EGP), the hepatic content of citrate (product of acetyl-CoA derived from FFA oxidation and oxaloacetate), and hepatic PKC isoform translocation after 2 and 7 h Intralipid + heparin (IH) or SAL in rats. Experiments were performed in the basal state and during hyperinsulinemic clamps (insulin infusion rate, 5 mU · kg⁻¹ · min⁻¹). IH increased EGP in the basal state (P < 0.001) and during hyperinsulinemia (P < 0.001) at 2 and 7 h. Also, 7-h infusion of IH induced resistance to the suppressive effect of insulin on EGP (P < 0.05). Glycerol infusion (resulting in plasma glycerol levels similar to IH infusion) did not have any effect on EGP. IH increased hepatic citrate content by twofold, independent of the insulin levels and the duration of IH infusion. IH induced hepatic PKC-δ translocation from the cytosolic to membrane fraction in all groups. PKC-δ translocation was greater at 7 compared with 2 h (P < 0.05). In conclusion,1) increased FFA oxidation may contribute to the FFA-induced increase in EGP in the basal state and during hyperinsulinemia but is not associated with FFA-induced hepatic insulin resistance, and2) the progressive insulin resistance induced by FFA in the liver is associated with a progressive increase in hepatic PKC-δ translocation.