Studies are reviewed in which the roles of insulin and glucagon in normal physiology and in diabetes are examined. In normal man, glucose ingestion is accompanied by a rise in insulin and fall in glucagon and is primarily disposed of in the liver, an organ sensitive to both hormones. However, infusions of glucagon in physiologic amounts indicate that insulin secretion rather than glucagon inhibition is the primary factor determining glucose disposal. Furthermore, minor elevations in blood glucose elicit increments in insulin concentration and inhibition of hepatic glucose output in the absence of changes in plasma glucagon. The primary physiologic role of glucagon is to prevent the hypoglycemia that would otherwise accompany noncarbohydrate (protein)-mediated insulin secretion. In diabetic as well as normal patients the stimulatory effect of glucagon on hepatic glucose production is evanescent. Increases in glucagon or changes in the I/G ratio can bring about deterioration in glucose tolerance or in diabetic control only so long as absolute insulin deficiency is present or pharmacologic elevations in glucagon are produced. After somatostatin administration, prolonged hypoinsulinemia in normal subjects is observed to result in fasting hyperglycemia in the absence of basal glucagon secretion. In diabetic patients the improvement in postprandial hyperglycemia produced by somatostatin can be accounted for by its inhibitory action on carbohydrate absorption in the gastrointestinal tract. It is concluded that insulin deficiency is the primary pathophysiologic disturbance in diabetes. While glocagon may worsen the consequences of insulin lack, it is neither sufficient nor necessary for the development of diabetes.