The current study investigated the fate of a [U-¹³C]palmitate tracer extracted by forearm muscle in type 2 diabetic and control subjects. We studied seven healthy lean male subjects and seven obese male subjects with type 2 diabetes using the forearm muscle balance technique with continuous intravenous infusion of the stable isotope tracer [U-¹³C]palmitate under baseline conditions and during intravenous infusion of the nonselective β-agonist isoprenaline (ISO; 20 ng · kg⁻¹ lean body mass · min⁻¹). In skeletal muscle of control subjects, there was a significant release of ¹³C-labeled oxidation products in the form of ¹³CO₂ (15% of ¹³C uptake from labeled palmitate) and a significant release of ¹³C-labeled glutamine (release of ¹³C-labeled atoms from glutamine was 6% of ¹³C uptake from labeled palmitate), whereas in type 2 diabetic subjects there was no detectable release of ¹³CO₂ and ¹³C-glutamine, despite a significant uptake of [U-¹³C]palmitate (60% of control value). There was net uptake of arterial ¹³C-labeled glutamate by forearm muscle in both groups. Also, the ISO-induced increase in arterial glutamine enrichment and arterial concentration of ¹³C-glutamine was more pronounced in the diabetic group relative to control subjects. In view of the diminished ISO-induced release of ¹³C-glutamine from type 2 diabetic muscle, the latter data indicate that more [U-¹³C]palmitate entered the liver in the diabetic group and was incorporated into newly synthesized glutamine and glutamate molecules. Thus, the lack of release of ¹³C-labeled oxidation products by type 2 diabetic muscle during β-adrenergic stimulation, despite significant [U-¹³C]palmitate uptake, indicates differences in the handling of fatty acids between type 2 diabetic subjects and healthy control subjects.