Since vitamin B12malabsorption has been described in diabetics on biguanides and inhibition of bile acid absorption found in rat ileum the effect of treatment with different biguanides (phenformin, buformin, metformin) on bile acid metabolism and vitamin B12 absorption was assessed in maturity onset diabetics. Biguanides did not alter faecal weight or faecal fat excretion, but they decreased faecal bile acid excretion. All biguanides tested increased deconjugation of glycocholic acid, as determined by a simple breath test technique. Vitamin B12 malabsorption was most prominent in patients on metformin. Discontinuation of biguanide treatment, or administration of antibiotics, normalized or improved the increased deconjugation of bile acids and the Schilling test. Decreased faecal bile acid excretion, positive 14C-glycocholate breath tests, pathological Schilling tests and the reversal of pathological tests by antibiotic treatment suggest that small intestinal bacterial overgrowth, leading to binding of the intrinsic-factor-vitamin B12-complex to bacteria, is responsible for the previously observed pathological Schilling tests in diabetics on biguanides. Bile acid malabsorption, possibly responsible for the cholesterol-lowering effect of biguanides, does not occur in diabetics on biguanides. Whether qualitative changes in small intestinal bile acid composition might affect cholesterol metabolism remains to be determined.