We directly examined whether visceral fat (VF) modulates hepatic insulin action by randomizing moderately obese (body wt approximately 400 g) Sprague-Dawley rats to either surgical removal of epididymal and perinephric fat pads (VF-; n = 9) or a sham operation (VF+; n = 11). Three weeks later, total VF was fourfold increased (8.5 +/- 1.2 vs. 2.1 +/- 0.3 g, P < 0.001) in the VF+ compared with the VF- group, but whole-body fat mass (determined using 3H2O) was not significantly different. The rates of insulin infusion required to maintain plasma glucose levels and basal hepatic glucose production in the presence of hepatic-pancreatic clamp were markedly decreased in VF- compared with VF+ rats (0.57 +/- 0.02 vs. 1.22 +/- 0.19 mU x kg(-1) x min(-1), P < 0.001). Similarly, plasma insulin levels were more than twofold higher in the VF+ group (P < 0.001). The heightened hepatic insulin sensitivity is supported by the decrease in gene expression of both glucose-6-phosphatase and PEPCK and by physiological hyperinsulinemia in VF- but not VF+ rats. The improvement in hepatic insulin sensitivity in VF- rats was also supported by a approximately 70% decrease in the plasma levels of insulin-like growth factor binding protein-1, a marker of insulin's transcription regulation in the liver. The removal of VF pads also resulted in marked decreases in the gene expression of tumor necrosis factor-alpha (by 72%) and leptin (by 60%) in subcutaneous fat. We conclude that visceral fat is a potent modulator of insulin action on hepatic glucose production and gene expression.