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A high-fat, high-calorie diet is associated with obesity and type 2 diabetes. However, the relative contribution of metabolic defects to the development of hyperglycaemia and type 2 diabetes is controversial. Accumulation of excess fat in muscle and adipose tissue in insulin resistance and type 2 diabetes may be linked with defective mitochondrial oxidative phosphorylation. The aim of the current study was to investigate acute effects of short-term fat overfeeding on glucose and insulin metabolism in young men. We studied the effects of 5 days’ high-fat (60% energy) overfeeding (+50%) versus a control diet on hepatic and peripheral insulin action by a hyperinsulinaemic euglycaemic clamp, muscle mitochondrial function by 31P magnetic resonance spectroscopy, and gene expression by qrt-PCR and microarray in 26 young men. Hepatic glucose production and fasting glucose levels increased significantly in response to overfeeding. However, peripheral insulin action, muscle mitochondrial function, and general and specific oxidative phosphorylation gene expression were unaffected by high-fat feeding. Insulin secretion increased appropriately to compensate for hepatic, and not for peripheral, insulin resistance. High-fat feeding increased fasting levels of plasma adiponectin, leptin and gastric inhibitory peptide (GIP). High-fat overfeeding increases fasting glucose levels due to increased hepatic glucose production. The increased insulin secretion may compensate for hepatic insulin resistance possibly mediated by elevated GIP secretion. Increased insulin secretion precedes the development of peripheral insulin resistance, mitochondrial dysfunction and obesity in response to overfeeding, suggesting a role for insulin per se as well GIP, in the development of peripheral insulin resistance and obesity.