Recent in vivo studies have demonstrated a strong negative correlation between liver triglyceride content and hepatic insulin sensitivity, but a causal relationship remains to be established. We therefore have examined parameters of direct hepatic insulin action on isolated steatotic livers from high-fat (HF)-fed rats compared with standard chow (SC)-fed controls. Direct hepatic action of insulin was assayed in Wistar rats after 6 wk of HF diet by measuring the insulin-induced suppression of epinephrine-induced hepatic glucose output in an isolated liver perfusion system. Insulin-induced activation of glycogen synthase was measured by quantifying the incorporation of radioactive UDP-glucose into glycogen in HF and SC liver lysates. HF diet induced visceral obesity, mild insulin resistance, and hepatic steatosis. Both suppression of epinephrine-induced glycogenolysis and activation of glycogen synthase by insulin were sustained in HF rats; no significant difference from SC controls could be detected. In conclusion, in our model, triglyceride accumulation into the liver was not sufficient to impair direct hepatic insulin action. The data argue for an important role of systemic factors in the regulation of hepatic glucose output and hepatic insulin sensitivity in vivo.