The objective of this study was to assess the role of free fatty acids (FFAs) as insulin secretagogues in patients with type 2 diabetes. To this end, basal insulin secretion rates (ISR) in response to acute increases in plasma FFAs were evaluated in patients with type 2 diabetes and in age- and weight-matched nondiabetic control subjects during 1) intravenous infusion of lipid plus heparin (L/H), which stimulated intravascular lipolysis, and 2) the FFA rebound, which followed lowering of plasma FFAs with nicotinic acid (NA) and was a consequence of increased lipolysis from the subject's own adipose tissue. At comparable euglycemia, diabetic patients had similar ISR but higher plasma beta-hydroxybutyrate (beta-OHB) levels during L/H infusion and higher plasma FFA and beta-OHB levels during the FFA rebound than nondiabetic control subjects. Correlating ISR with plasma FFA plus beta-OHB levels showed that in response to the same changes in FFA plus beta-OHB levels, diabetic patients secreted approximately 30% less insulin than nondiabetic control subjects. In addition, twice as much insulin was secreted during L/H infusion as during the FFA rebound in response to the same FFA/beta-OHB stimulation by both diabetic patients and control subjects. Glycerol, which was present in the infused lipid (272 mmol/l) did not affect ISR. We concluded that 1) assessment of FFA effects on ISR requires consideration of effects on ISR by ketone bodies; 2) ISR responses to FFA/beta-OHB were defective in patients with type 2 diabetes (partial beta-cell lipid blindness), but this defect was compensated by elevated plasma levels of FFAs and ketone bodies; and 3) approximately two times more insulin was released per unit change in plasma FFA plus beta-OHB during L/H infusion than during the FFA rebound after NA. The reason for this remains to be explored.