To determine causes of interindividual variation in insulin requirements, we recruited 20 type 2 diabetic patients with stable glucose control and insulin doses for >1 year on combination therapy with bedtime NPH insulin and metformin. Insulin absorption (increase in free and total insulin over 8 h after a subcutaneous dose of regular insulin) and actions of intravenous (6-h 0.3 mU · kg -1 · min -1 euglycemic insulin clamp combined with [3-3 H]glucose) and subcutaneous (glucose infusion rate required to maintain isoglycemia and suppression of free fatty acids [FFAs]) insulin, liver fat content (proton spectroscopy), visceral fat (magnetic resonance imaging), weight, and body composition were determined. We found the following variation in parameters: insulin dose range 10-176 U (mean 42 U, fold variation 17.6؋) or 0.13-1.39 U/kg (0.44 U/kg, 10.7؋), absorbed insulin 10.6؋, action of subcutaneous insulin to suppress FFAs 7.5؋ and to stimulate glucose metabolism (M value) 11.5؋, body weight 67-127 kg (91 kg, 1.9؋), liver fat 2-28% (12%, 14؋), and visceral fat 179-2,053 ml (1,114 ml, 11.5؋). The amount of insulin absorbed, measured as either free or total insulin, was significantly correlated with its ability to suppress FFAs and stimulate glucose metabolism but not with the insulin dose per se. The actions of absorbed insulin were, on the other hand, significantly correlated with the daily insulin dose (r = 0.70 for action on FFAs, P < 0.001, and r = -0.61 for M value, P < 0.005). Actions of subcutaneous and intravenous insulin to suppress FFAs were significantly correlated (r = 0.82, P < 0.001, R 2 = 67%). Of the measures of adiposity, the percent hepatic fat was the parameter best correlated with the daily insulin dose (r = 0.76, P < 0.001). The percent hepatic fat was also significantly correlated with the ability of intravenous insulin to suppress endogenous glucose production (r = 0.72, P < 0.005). We conclude that the major reason for interindividual variation in insulin requirements in type 2 diabetes is the variation in insulin action. Variation in hepatic fat content may influence insulin requirements via an effect on the sensitivity of endogenous glucose production to insulin. Diabetes 49:749-758, 2000