Plasma levels of the orexigenic hormone, ghrelin, decrease rapidly on nutrient ingestion and yet are paradoxically elevated in rats with hyperphagia induced by streptozotocin-induced diabetes (STZ-DM). In the current work, we investigated the mechanisms underlying the relationships among uncontrolled diabetes, food intake, and plasma ghrelin concentrations in an effort to clarify whether increased ghrelin signaling contributes to diabetic hyperphagia. Whereas food intake did not increase until d 3 after STZ administration, plasma ghrelin levels were increased by more than 2-fold (P < 0.05) on d 1. As hyperphagia developed, however, plasma ghrelin levels declined steadily. Because this reduction of plasma ghrelin levels was reversed by matching food intake of STZ-DM rats to that of nondiabetic controls, our results demonstrated that the effect of uncontrolled diabetes to increase plasma ghrelin levels is partially offset by hyperphagic feeding. In addition, we found that although intragastric nutrient infusion rapidly and comparably decreased plasma ghrelin levels in both groups (by 46–49%; P < 0.05), this effect was short lived in STZ-DM rats relative to nondiabetic controls (60 min vs. 120 min; P < 0.05). We further demonstrated that in rats with STZ-DM, food intake increased by 357% (P < 0.05) in response to intracerebroventricular administration of ghrelin at a dose that was subthreshold for feeding effects in nondiabetic controls. Collectively, these findings demonstrate that uncontrolled diabetes increases both circulating ghrelin levels and behavioral sensitivity to ghrelin. Although plasma ghrelin levels fall in response to hyperphagic feeding, these findings support the hypothesis that increased ghrelin signaling contributes to the pathogenesis of diabetic hyperphagia.