To investigate the potential of therapies which reduce glucocorticoid action in patients with type 2 diabetes we performed a randomised, double-blinded, placebo-controlled crossover study of acute glucocorticoid blockade, using the glucocorticoid receptor antagonist RU38486 (mifepristone) and cortisol biosynthesis inhibitor (metyrapone), in 14 men with type 2 diabetes. Stable isotope dilution methodologies were used to measure the rates of appearance (Ra) of glucose, glycerol and free fatty acids (FFAs), including during a low dose (10mU/m(2)/min) hyperinsulinaemic clamp, and sub-group analysis was conducted in patients with high or low liver fat content measured by magnetic resonance spectroscopy (n=7/group). Glucocorticoid blockade lowered fasting glucose and insulin levels, and improved insulin sensitivity of FFA and glycerol turnover and hepatic glucose production. Amongst this population with type 2 diabetes high liver fat was associated with hyperinsulinaemia, higher fasting glucose levels, peripheral and hepatic insulin resistance, and impaired suppression of FFA oxidation and FFA and glycerol turnover during hyperinsulinaemia. Glucocorticoid blockade had similar effects in those with and without high liver fat. Longer term treatments targeting glucocorticoid action may be useful in type 2 diabetes with and without fatty liver.