In order to determine whether glucagon has a ketogenic effect through the activation of hepatic ketogenesis, 1 mg of glucagon was injected i.v. in bolus in normal [human] subjects and in mild or severe (insulin-dependent) diabetics, and plasma levels of 3-hydroxybutyrate (3-OHBA) and free fatty acids (FFA) were measured. The ketogenic effect of insulin-free glucagon was also tested in diabetic rats. The effect of (d)-decanoylcarnitine, an inhibitor of hepatic fatty acid oxidation at a step catalyzed by carnitine palmitoyltransferase, on the ketogenic action of glucagon was also studied in the diabetic rats. In normal subjects and in mild diabetics, glucagon had no effect on plasma 3-OHBA concentration, but a significant elevation (0.55 m mol/l at 30 min) was observed following glucagon injection in insulin-dependent diabetics. The hyperketonemic effect of glucagon was most marked (1.6 m mol/l at 30 min) in those who exhibited mild ketonemia before glucagon injection. No comparable rise of plasma FFA was observed in these subjects. In normal subjects, plasma FFA significantly decreased following glucagon, presumably due to the anti-lipolytic effect of released endogenous insulin. In normal rats, insulin-free glucagon (0.5 mg i.v.) produced a small but significant rise of plasma levels of FFA and 3-OHBA within 20 min. In diabetic rats the greater rise of plasma 3-OHBA (1.4 mmol/l at 20 min) following glucagon was observed without any rise of FFA. This rise was abolished by the concomitant injection of (d)-decanoylcarnitine. Glucagon probably has ketogenic action through the activation of hepatic ketogenesis under conditions where insulinopenia and the absence of endogenous release of insulin coexist.