The mechanism by which glucocorticoids induce insulin resistance was studied in normal rats administered for 2 days with corticosterone then tested by euglycaemic hyperinsulinaemic clamps. Corticosterone administration induced a slight hyperglycaemia, hyperinsulinaemia and increased non-esterified fatty acid levels. It impaired insulin-stimulated total glucose utilization (corticosterone 15.7±0.7; controls 24.6±0.8 mg·kg⁻¹·min⁻¹), as well as residual hepatic glucose production (corticosterone 4.9±1.0; controls 2.0±0.7 mg·kg⁻¹·min⁻¹). During the clamps, insulin did not decrease the elevated non-esterified fatty acid levels in corticosterone-administered rats (corticosterone 1.38±0.15, controls 0.22±0.04 mmol/l). Corticosterone administration decreased the in vivo insulin-stimulated glucose utilization index by individual muscles by 62±6%, and the de novo glycogen synthesis by 78±2% (n=8–9 muscles). GLUT4 protein and mRNA levels were either unchanged or slightly increased by corticosterone administration. Inhibition of lipid oxidation by etomoxir prevented corticosterone-induced muscle but not hepatic insulin resistance. In conclusion, glucocorticoid-induced muscle insulin resistance is due to excessive nonesterified fatty acid oxidation, possibly via increased glucose fatty-acid cycle ultimately inhibiting glucose transport, or via decreased glycogen synthesis, or by a direct effect on glucose transporter translocation or activity or both.