Intrauterine growth retardation (IUGR) has been linked to the development of type 2 diabetes in adulthood. We developed an IUGR model in rats whereby at age 3-6 months the animals develop a diabetes that is associated with insulin resistance. Hyperinsulinemiceuglycemic clamp studies were performed at age 8 weeks, before the onset of obesity and diabetes. Basal hepatic glucose production (HGP) was significantly higher in IUGR than in control rats (14.6 ؎ 0.4 vs. 12.3 ؎ 0.3 mg ⅐ kg ؊1 ⅐ min ؊1 ; P < 0.05). Insulin suppression of HGP was blunted in IUGR versus control rats (10.4 ؎ 0.6 vs. 6.5 ؎ 1.0 mg ⅐ kg ؊1 ⅐ min ؊1 ; P < 0.01); however, rates of glucose uptake and glycogenolysis were similar between the two groups. Insulin-stimulated insulin receptor substrate 2 and Akt-2 phosphorylation were significantly blunted in IUGR rats. PEPCK and glucose-6-phosphatase mRNA levels were increased at least threefold in liver of IUGR compared with control rats. These studies suggest that an aberrant intrauterine milieu permanently impairs insulin signaling in the liver so that gluconeogenesis is augmented in the IUGR rat. These processes occur early in life, before the onset of hyperglycemia, and indicate that uteroplacental insufficiency causes a primary defect in gene expression and hepatic metabolism that leads to the eventual development of overt hyperglycemia. Diabetes 53:2617-2622, 2004 U teroplacental insufficiency limits the availability of substrates to the fetus and retards growth during gestation (1,2). We have previously shown that this abnormal metabolic intrauterine milieu affects the development of the fetus by modifying the gene expression and function of susceptible cells in the pancreas, muscle, and liver (3-5). The end result is the development of type 2 diabetes in adulthood (4). The unique feature of our animal model of intrauterine growth retardation (IUGR) is its ability to induce diabetes in adult rats with the salient features of most forms of type 2 diabetes in humans, that is, defects in insulin action and insulin secretion. IUGR animals exhibit insulin resistance early in life (before the onset of hyperglycemia) that is characterized by blunted whole-body glucose disposal in response to insulin (4).The liver plays an important role in maintaining blood glucose homeostasis by controlling hepatic glucose production (HGP) (6,7). In type 2 diabetes, the high levels of HGP and the inability of insulin to adequately suppress hepatic glucose output are major contributors to both fasting hyperglycemia and exaggerated postprandial hyperglycemia (8 -14).Insulin resistance is associated with a postreceptor defect(s) in the intracellular insulin-signaling cascade, leading to the failure of insulin to suppress HGP (15). Insulin binds to its receptor, which leads to activation of the insulin receptor, insulin receptor substrates (IRSs) such as IRS-1 and -2, phosphatidylinositol 3-kinase, and Akt. Akt activation leads to decreased transcription of PEPCK and glucose-6-phosphatase (G6Pase) (16), thus reducing gluc...