The failure of pancreas transplantation to normalize plasma glucagon concentration and insulin: glucagon balance in portal blood has recently been demonstrated on streptozotocin-diabetic rats. The same experimental model was used in the present study to examine the effect of pancreas transplantation on liver carbohydrate metabolism. Twenty weeks after pancreas transplantation, the left hepatic lobe was removed for studies of several glycolytic and gluconeogenic enzymes. Livers from nontransplanted diabetic rats showed decreased activities of glycolytic enzymes and enhanced activities of gluconeogenic enzymes. In recipients of pancreas transplants, however, the activities of glycolytic and gluconeogenic enzymes did not differ from those observed in normal control rats. It is concluded that the alterations of hepatic gluconeogenesis and glycolysis observed in streptozotocin-diabetic rats are restored to normal by the pancreas transplant despite its failure to obviate hyperglucagonaemia.