Excessive circulating fat levels are a defining feature of poor metabolic control in diabetes. Splanchnic adipose tissue is a source of free fatty acids (FFA), and the liver is a key site of FFA utilization and the sole source of ketones. Despite the role of splanchnic tissues in fat metabolism, little is known about how these tissues respond to diabetes under divergent metabolic conditions. Therefore, splanchnic fat metabolism was studied in poorly controlled diabetes under two conditions. First, it was studied during exercise, a stimulus that enhances FFA flux. Second, it was studied while insulin was being acutely infused to achieve levels normally present during exercise, a treatment that may be expected to inhibit lipolysis. For this purpose, liver and gut arteriovenous differences were used during rest and 2.5 h of treadmill exercise in insulin-deficient (n = 6) and acutely insulin-infused (n = 4) depancreatized (PX) dogs. The data show that 1) exercise, in insulin-deficient PX dogs, leads to an increase in net FFA release from mesenteric fat that is equal in magnitude to the response in nondiabetic dogs; 2) net hepatic fractional FFA extraction is increased twofold during exercise in both insulin-deficient PX dogs and nondiabetic control dogs; 3) during exercise, approximately 40 and 75% of the FFA consumed by the liver is effectively transferred from fat stores mobilized from splanchnic adipose tissue in insulin-deficient PX and nondiabetic dogs, respectively; 4) hepatic ketogenic efficiency is elevated during rest three- to fourfold in insulin-deficient PX dogs compared with nondiabetic control dogs and remains elevated during exercise; and 5) surprisingly, acute insulin replacement is ineffective in normalizing net gut, hepatic, or splanchnic FFA or ketone body balances in PX dogs.