The present study was intended to investigate the different components of fatty acid utilization during a 60-min period of moderate-intensity cycling exercise (50% of VO2max) in eight male type 2 diabetic subjects (aged 52.6 +/- 3.1 years, body fat 35.8 +/- 1.3%) and eight male obese control subjects (aged 45.1 +/- 1.4 years, body fat 34.2 +/- 1.3%) matched for age, body composition, and maximal aerobic capacity. To quantitate the different components of fatty acid metabolism, an isotope infusion of [U-13C]-palmitate was used in combination with indirect calorimetry. In separate experiments, the 13C label recovery in expired air was determined during infusion of [1,2-13C]-acetate (acetate recovery factor). There were no differences in energy expenditure or carbohydrate and total fat oxidation between the groups. The rate of appearance (Ra) of free fatty acid (FFA) (P < 0.05) and the exercise-induced increase in Ra of FFA were significantly lower (P < 0.05) in type 2 diabetic subjects compared with control subjects (baseline vs. exercise [40-60 min]; type 2 diabetes 11.9 +/- 0.9 vs. 19.6 +/- 2.2 micromol x kg(-1) fat-free mass [FFM] x min(-1) and control 15.8 +/- 1.8 vs. 28.6 +/- 2.1 micromol x kg(-1) FFM x min(-1)). The oxidation of plasma-derived fatty acids was significantly lower in type 2 diabetic subjects during both conditions (P < 0.05, baseline vs. exercise [40-60 min]; type 2 diabetes 4.2 +/- 0.5 vs. 14.1 +/- 1.9 micromol x kg(-1) FFM x min(-1) and control 6.2 +/- 0.6 vs. 20.4 +/- 1.9 micromol x kg(-1) FFM x min(-1)), whereas the oxidation of triglyceride-derived fatty acids was higher (P < 0.05). It is hypothesized that these impairments in fatty acid utilization may play a role in the etiology of skeletal muscle and hepatic insulin resistance.