Impaired fasting glucose (IFG) and impaired glucose tolerance (IGT) are two intermediate states in the transition from normal glucose metabolism to type 2 diabetes. Insulin clamp studies have shown that subjects with IGT have increased insulin resistance in skeletal muscle, while subjects with IFG have near normal muscle insulin sensitivity. Because of the central role of altered free fatty acid (FFA) metabolism in the pathogenesis of insulin resistance, we have examined plasma free fatty acid concentration under fasting conditions, and during OGTT in subjects with IGT and IFG. Seventy-one NGT, 70 IGT and 46 IFG subjects were studied. Fasting plasma FFA in IGT subjects was significantly greater than NGT, while subjects with IFG had similar fasting plasma FFA concentration to NGT. However, fasting plasma insulin concentration was significantly increased in IFG subjects compared to NGT while subjects with IGT had near normal fasting plasma insulin levels. The adipocyte insulin resistance index (product of fasting plasma FFA and FPI) was significantly increased in both IFG and IGT subjects compared to NGT. During the OGTT both IFG and IGT subjects suppressed their plasma FFA concentration similarly to NGT subjects, but the post-glucose loads were significantly increased in both IFG and IGT subjects. These data suggest that both subjects with IFG and IGT have increased resistance to the antilipolytic action of insulin. However, under basal conditions, fasting hyperinsulinemia in IFG subjects is sufficient to offset the adipocyte insulin resistance and maintain normal fasting plasma FFA concentration while the lack of increase in FPI in IGT subjects results in an elevated fasting plasma FFA.