Physiologic elevations of plasma free fatty acid levels cause peripheral (muscle) insulin resistance. They do this by inhibiting insulin stimulated glucose transport, phosphorylation, or both, and glycogen synthesis. Free fatty acids also cause hepatic insulin resistance, which results in increased rates of endogenous glucose production in relation to the prevailing degree of hyperinsulinemia. Free fatty acids support between 30 and 50% of basal insulin secretion and potentiate glucose stimulated insulin secretion, short-term and long-term, in diabetic and nondiabetic people. The insulin stimulatory action of free fatty acids enables obese people without a genetic predisposition to develop type 2 diabetes to compensate for their free fatty acid mediated insulin resistance with an increase in free fatty acid mediated insulin secretion. In contrast, people who are genetically predisposed to develop type 2 diabetes appear to be unable to secrete sufficient amounts of insulin to compensate for their free fatty acid induced insulin resistance. This will lead to an increase in blood glucose concentration and eventually to type 2 diabetes.