Obesity is highly correlated with insulin resistance and the development of type 2 diabetes. Insulin resistance will result in a decrease in insulin’s ability to stimulate glucose uptake into peripheral tissue and will suppress glucose production by the liver. However, the development of peripheral and hepatic insulin resistance relative to one another in the context of obesity-associated insulin resistance is not well understood. To examine this phenomena, we used the moderate fat-fed dog model, which has been shown to develop both subcutaneous and visceral adiposity and severe insulin resistance. Six normal dogs were fed an isocaloric diet with a modest increase in fat content for 12 weeks, and they were assessed at weeks 0, 6, and 12 for changes in insulin sensitivity and glucose turnover. By week 12 of the diet, there was a more than twofold increase in trunk adiposity as assessed by magnetic resonance imaging because of an accumulation in both subcutaneous and visceral fat depots with very little change in body weight. Fasting plasma insulin had increased by week 6 (150% of week 0) and remained increased up to week 12 of the study (170% of week 0). Surprisingly, there appeared to be no change in the rates of insulin-stimulated glucose uptake as measured by euglycemic-hyperinsulinemic clamps throughout the course of fat feeding. However, there was an increase in steady-state plasma insulin levels at weeks 6 and 12, indicating a moderate degree of peripheral insulin resistance. In contrast to the moderate defect seen in the periphery, there was a marked impairment in insulin’s ability to suppress endogenous glucose production during the clamp such that by week 12 of the study, there was a complete inability of insulin to suppress glucose production. Our results indicate that a diet enriched with a moderate amount of fat results in the development of both subcutaneous and visceral adiposity, hyperinsulinemia, and a modest degree of peripheral insulin resistance. However, there is a complete inability of insulin to suppress hepatic glucose production during the clamp, suggesting that insulin resistance of the liver may be the primary defect in the development of insulin resistance associated with obesity.