To determine whether type 2 diabetes mellitus alters systemic and regional free fatty acid ([3H]palmitate) metabolism, 14 nondiabetic (ND) and 14 type 2 diabetic (D) subjects underwent hyperinsulinemic-hyperglycemic (approximately 9.3 mM) clamps. The subjects were matched for age, body mass index, percent body fat, and fat-free mass. D subjects had more (P < 0.05) visceral fat than ND. During somatostatin, replacement growth hormone, and glucagon infusions, insulin was infused to achieve moderate (approximately 75 pmol/l) and high (approximately 150 pmol/l) physiological insulin levels. D subjects had greater (P < 0.02) systemic and regional (splanchnic and leg) palmitate release than ND subjects during both insulin infusion intervals. The relative contributions of splanchnic, leg, and nonsplanchnic upper body regions to systemic palmitate release did not differ between groups, although the last contributed the most (approximately 75%) to systemic palmitate release. Visceral fat area correlated with systemic palmitate flux (r = 0.45, P < 0.03) during both insulin infusions. We conclude that type 2 diabetes is associated with a generalized impairment in insulin suppression of lipolysis compared with equally obese ND individuals.