The effect of tolazamide on in vitro rates of gluconeogenesis, ketogenesis, and glycogenesis was determined in liver tissue from fasted normal and diabetic rats. Hormones were not added to the incubation mixture. Two concentrations of the drug were tested, one of which was therapeutic (40 μg/ml) and other immoderately elevated (400 μg/ml). Neither drug concentration affected hepatic glycogen synthesis. However, the low dose of tolazamide inhibited ketogenesis in the diabetic liver by 39% and in the control liver by 32% oxidative CO2 production from palmitate was reduced in parallel with ketogenesis. The drug did not alter ketogenesis in isolated intact mitochondria. Similarly, this same therapeutic dose curtailed hepatic gluconeogenesis only in control liver (74% inhibition); this reaction was unaltered by this drug concentration in the explants derived from the diabetic rats. The logarithmically higher dose inhibited hepatic gluconeogenesis in both control and diabetic liver tissue by 56% and 51%, respectively. Hence, possibly acting at a postreceptor site, therapeutic concentrations of tolazamide can decrease rat hepatic in vitro gluconeogenesis and ketogenesis. © 1986 by The Endocrine Society.