Insulin encapsulated in lipid vesicles and targeted to hepatocytes by means of a digalactosy diglyceride moiety [(designated vesicle encapsulated insulin (VEI)] was administered intrave nously to conscious catheterized diabetic dogs to determine the effects on hepatic and extrahepatic glucose utilization. Our results indicate that VE administered intravenously to diabetic dogs ove a dose range of 0.5 to 2.0 mU · kg−1·min−1 reduce hepatic glucose output or induces hepatic glucos uptake without causing any significant alteratios in the rate of extrahepatic glucose utilization. Steady-state comparisons of 1.0 mU·kg−1·min−1 VEI with intraportal and peripherally administered insulin revealed that VEI and intraportal insulin result in significantly less extrahepatic glucose utilization than does an equivalent dose of peripherally administered insulin (6.36 ± 1.21 and 5.08 ± 0.97 vs. 8.82 ± 1.61 mg.kg−1.min−1; P < 0.03). Through the use of VEI, we were able to significantly alter the deposition of intravenously administered glucose from 11% hepatic and 89% extrahepatic noted with peripheral insulin to 35% hepatic and 65% extrahepatic with VEI (P < 0.03). Thus, by encapsulating insulin into a lipid carrier specifically targeted to the liver, selective hepatic insulinization can be achieved. As a result of this approach, one can alter the distribution of a glucose load to favor hepatic deposition.