The aim of this study was to determine the effect of high levels of free fatty acids (FFA) and/or hyperglycemia on hepatic glycogenolysis and gluconeogenesis. Intralipid was infused peripherally in 18-h-fasted conscious dogs maintained on a pancreatic clamp in the presence (FFA + HG) or absence (FFA + EuG) of hyperglycemia. In the control studies, Intralipid was not infused, and euglycemia (EuG) or hyperglycemia (HG) was maintained. Insulin and glucagon were clamped at basal levels in all four groups. The arterial blood glucose level increased by 50% in the HG and FFA + HG groups. It did not change in the EuG and FFA + EuG groups. Arterial plasma FFA increased by ∼140% in the FFA + EuG and FFA + HG groups but did not change significantly either in the EuG or HG groups. Arterial glycerol levels increased by ∼150% in both groups. Overall (3-h) net hepatic glycogenolysis was 196 ± 26 mg/kg in the EuG group. It decreased by 96 ± 20, 82 ± 16, and 177 ± 22 mg/kg in the HG, FFA + EuG, and FFA + HG groups, respectively. Overall (3-h) hepatic gluconeogenic flux was 128 ± 22 mg/kg in the EuG group, but it was suppressed by 30 ± 9 mg/kg in response to hyperglycemia. It was increased by 59 ± 12 and 56 ± 10 mg/kg in the FFA + EuG and FFA + HG groups, respectively. In conclusion, an increase in plasma FFA and glycerol significantly inhibited hepatic glycogenolysis and markedly stimulated hepatic gluconeogenesis.