Although type 2 diabetes mellitus is associated with insulin resistance, many individuals compensate by increasing insulin secretion. Putative mechanisms underlying this compensation were assessed in the present study by use of 4-day glucose (GLC; 35% Glc, 2 ml/h) and lipid (LIH; 10% Intralipid + 20 U/ml heparin; 2 ml/h) infusions to rats. Within 2 days of beginning the infusion of either lipid or glucose, plasma glucose profiles were normalized (relative to saline-infused control rats; SAL; 0.45% 2 ml/h). During glucose infusion, plasma glucose was maintained in the normal range by an approximately twofold increase in plasma insulin and an ∼80% increase in β-cell mass. During LIH infusion, glucose profiles were also maintained in the normal range. Plasma insulin responses during feeding were doubled, and β-cell mass increased 54%. For both groups, the increase in β-cell mass was associated with increased β-cell proliferation (98% increase during GLC and 125% increase during LIH). At the end of the 4-day infusions, no significant changes were observed in islet-specific gene transcription (i.e., the expression of islet hormone genes, glucose metabolism genes, and insulin transcription factors were unaffected). Two days after termination of the infusions, the glucose-stimulated plasma insulin response was increased ∼67% in glucose-infused animals. No sustained effect on insulin secretory capacity was observed in the LIH animals. The increase in plasma insulin response after glucose infusion was achieved in the absence of any change in insulin clearance. We conclude that, in rats, an increase in insulin demand after an increase in glucose appearance or free fatty acid leads to an increase in β-cell mass, mediated in part by an increase in β-cell proliferation, and that these compensatory changes lead to increased insulin secretion, normal plasma glucose levels, and the maintenance of normal islet gene expression.