OBJECTIVE - Hepatic steatosis is common in type 2 diabetes. It is causally linked to the features of the metabolic syndrome, liver cirrhosis, and cardiovascular disease. Experimental data have indicated that increased liver fat may impair hepatic perfusion and metabolism. The aim of the current study was to assess hepatic parenchymal perfusion, together with glucose and fatty acid metabolism, in relation to hepatic triglyceride content. RESEARCH DESIGN AND METHODS - Fifty-nine men with well controlled type 2 diabetes and 18 age-matched healthy normoglycemic men were studied using positron emission tomography to assess hepatic tissue perfusion, insulin-stimulated glucose, and fasting fatty acid metabolism, respectively, in relation to hepatic triglyceride content, quantified by proton magnetic resonance spectroscopy. Patients were divided into two groups with hepatic triglyceride content below (type 2 diabeteslow) or above (type 2 diabetes-high) the median of 8.6%. RESULTS - Type 2 diabetes-high patients had the highest BMI and A1C and lowest whole-body insulin sensitivity (ANOVA, all P < 0.001). Compared with control subjects and type 2 diabeteslow patients, type 2 diabetes-high patients had the lowest hepatic parenchymal perfusion (P = 0.004) and insulin-stimulated hepatic glucose uptake (P = 0.013). The observed decrease in hepatic fatty acid influx rate constant, however, only reached borderline significance (P = 0.088). In type 2 diabetic patients, hepatic parenchymal perfusion (r = -0.360, P = 0.007) and hepatic fatty acid influx rate constant (r = -0.407, P = 0.007) correlated inversely with hepatic triglyceride content. In a pooled analysis, hepatic fat correlated with hepatic glucose uptake (r = -0.329, P = 0.004). CONCLUSIONS - In conclusion, type 2 diabetic patients with increased hepatic triglyceride content showed decreased hepatic parenchymal perfusion and hepatic insulin mediated glucose uptake, suggesting a potential modulating effect of hepatic fat on hepatic physiology. © 2010 by the American Diabetes Association.