AIMS/HYPOTHESIS: Disturbances in substrate source metabolism and, more particularly, in fatty acid metabolism, play an important role in the aetiology and progression of type 2 diabetes. However, data on substrate source utilisation in type 2 diabetes are inconclusive. METHODS: [U-(13)C]palmitate and [6,6-(2)H(2)]glucose tracers were used to assess plasma NEFA and glucose oxidation rates and to estimate the use of muscle- and/or lipoprotein-derived triacylglycerol and muscle glycogen. Subjects were ten male patients who had a long-term (7 +/- 1 years) diagnosis of type 2 diabetes and were overweight, and ten matched healthy, male control subjects. Muscle biopsy samples were collected before and after exercise to assess muscle fibre type-specific intramyocellular lipid and glycogen content. RESULTS: At rest and during exercise, the diabetes patients had greater values than the controls for palmitate rate of appearance (Ra) (rest, 2.46 +/- 0.18 and 1.85 +/- 0.20 respectively; exercise, 3.71 +/- 0.36 and 2.84 +/- 0.20 micromol kg(-1) min(-1)) and rate of disappearance (Rd) (rest, 2.45 +/- 0.18 and 1.83 +/- 0.20; exercise, 3.64 +/- 0.35 and 2.80 +/- 0.20 micromol kg(-1) min(-1) respectively). This was accompanied by significantly higher fat oxidation rates at rest and during recovery in the diabetes patients (rest, 0.11 +/- 0.01 in diabetes patients and 0.09 +/- 0.01 in controls; recovery, 0.13 +/- 0.01 and 0.11 +/- 0.01 g/min respectively), despite significantly greater plasma glucose Ra, Rd and circulating plasma glucose concentrations. Furthermore, exercise significantly lowered plasma glucose concentrations in the diabetes patients, as a result of increased blood glucose disposal. CONCLUSION: This study demonstrates that substrate source utilisation in long-term-diagnosed type 2 diabetes patients, in whom compensatory hyperinsulinaemia is no longer present, shifts towards an increase in whole-body fat oxidation rate and is accompanied by disturbances in fat and carbohydrate handling. © 2006 Springer-Verlag.