In this study the effect of two drugs [etomoxir and nicotinic acid (NA)] on plasma glucose, free–fatty acid (FFA), and triglyceride (TG) concentrations was determined in rats with streptozocin (STZ)-induced diabetes. The two compounds modify FFA metabolism by different mechanisms, etomoxir (ethyl-2-[6-(4-cholorophenoxyl)-hexyl]oxirane-2-carboxylate) by inhibiting hepatic fatty acid oxidation, and NA by inhibiting lipolysis in adipose tissue. Diabetes was induced in male Sprague-Dawley rats, weighing ∼ 400 g, by STZ injection (30 mg/kg i.v.), and the metabolic effects of the two drugs were studied 7–10 days later. The acute administration of either etomoxir or NA lowered plasma glucose concentrations in diabetic rats by ∼150 mg/dl (P < .001) in 4 h. However, the two drugs differed dramatically in their effects on plasma FFA and TG concentrations. Specifically, etomoxir produced striking increases in plasma FFA and TG concentrations, whereas NA administration caused a marked decrease. However, when NA was given in conjunction with etomoxir, NA prevented the increase in plasma FFA and TG concentration seen with etomoxir; the combination of NA and etomoxir approximately doubled the decrease in plasma glucose concentration produced by NA or etomoxir when given alone. Because plasma insulin concentrations did not change in response to either drug, whether administered singly or in combination, these metabolic effects do not result from a change in insulin secretion. These results suggest that modulation of FFA metabolism at the level of the adipocyte or the liver can have dramatic effects on carbohydrate and lipid metabolism. Also, NA prevented the potentially adverse effects that etomoxir had on FFA and TG. The observation that the two drugs given in combination were capable of lowering plasma glucose from <400 mg/dl to essentially normal levels within 4 h raises the possibility that this pharmacologic approach may have relevance to the treatment of diabetes.