Aims/hypothesis Acute hyperglycaemia rapidly suppresses endogenous glucose production (EGP) in non-diabetic individuals, mainly by inhibiting glycogenolysis. Loss of this 'glucose effectiveness' contributes to fasting hyperglycaemia in type 2 diabetes. Elevated NEFA levels characteristic of type 2 diabetes impair glucose effectiveness, although the mechanism is not fully understood. Therefore we examined the impact of increasing NEFA levels on the ability of hyperglycaemia to regulate pathways of EGP. Methods We performed 4 h 'pancreatic clamp' studies (somatostatin; basal glucagon/growth hormone/insulin) in seven non-diabetic individuals. Glucose fluxes (D-[6,6-2 H 2 ] glucose) and hepatic glycogen concentrations ( 13 C magnetic resonance spectroscopy) were quantified under three conditions: euglycaemia, hyperglycaemia and hyperglycaemia with elevated NEFA (HY-NEFA). Results EGP was suppressed by hyperglycaemia, but not by HY-NEFA. Hepatic glycogen concentration decreased ∼14% with prolonged fasting during euglycaemia and increased by ∼12% with hyperglycaemia. In contrast, raising NEFA levels in HY-NEFA caused a substantial ∼23% reduction in hepatic glycogen concentration. Moreover, rates of gluconeogenesis were decreased with hyperglycaemia, but increased with HY-NEFA. Conclusions/interpretation Increased NEFA appear to profoundly blunt the ability of hyperglycaemia to inhibit net glycogenolysis under basal hormonal conditions.