We infused small doses of insulin (0.3 mU per kilogram of body weight per minute; range, 0.9 to 1.7 U per hour) for three hours into 8 subjects who did not have diabetes, 11 patients with well-controlled diabetes (hemoglobin A1, 7.6 +/- 0.7 percent), and 10 patients with poorly controlled diabetes (hemoglobin A1, 11.5 +/- 1.7 percent) to simulate the mild peripheral hyperinsulinemia observed during insulin treatment. Normoglycemia was established in the patients during the night before study. During the insulin infusion, the plasma glucose level stabilized at 60 to 70 mg per deciliter (3.3 to 3.9 mmol per liter) in the subjects without diabetes and the patients with poorly controlled diabetes, because of a rebound increase in hepatic glucose production. In contrast, hypoglycemia developed in the patients with well-controlled diabetes (42 +/- 2 mg of glucose per deciliter, or 2.3 +/- 0.1 mmol per liter, P less than 0.01) as glucose production remained suppressed. The hypoglycemia in the patients with well-controlled diabetes was associated with a lowering of the plasma threshold of glucose that triggered a release of epinephrine (less than 45 mg of glucose per deciliter, or 2.5 mmol per liter, vs. greater than 55 mg per deciliter, or 3.1 mmol per liter, in the other groups, P less than 0.01) as well as an enhanced sensitivity to the suppressive effects of insulin on hepatic glucose production. Nearly identical disturbances in glucose counterregulation and decreased perception of hypoglycemia developed when four of the subjects with poorly controlled diabetes were restudied after intensive treatment. We conclude that strict control of diabetes induces physiologic alterations (delayed release of epinephrine and persistent suppression of glucose production) that impair glucose counterregulation to doses of insulin in the therapeutic range. These defects may contribute to the increased incidence of severe hypoglycemia reported during intensive insulin therapy.