In rat hepatocytes, the basal glycogen synthase activation state is decreased in the fed and diabetic states, whereas glycogen phosphorylase a activity decreases only in diabetes. Diabetes practically abolishes the time- and dose-dependent activation of glycogen synthase to glucose especially in the fed state. Fructose, however, is still able to activate this enzyme. Glycogen phosphorylase response to both sugars is operative in all cases. Cell incubation with the combination of 20 mM glucose plus 3 mM fructose produces a great activation of glycogen synthase and a potentiated glycogen deposition in both normal and diabetic conditions. Using radiolabeled sugars, we demonstrate that this enhanced glycogen synthesis is achieved from both glucose and fructose even in the diabetic state. Therefore, the presence of fructose plays a permissive role in glycogen synthesis from glucose in diabetic animals. Glucose and fructose increase the intracellular concentration of glucose 6-phosphate and fructose reduces the concentration of ATP. There is a close correlation between the ratio of the intracellular concentrations of glucose 6-phosphate and ATP (G6-P/ATP) and the activation state of glycogen synthase in hepatocytes from both normal and diabetic animals. However, for any given value of the G6-P/ATP ratio, the activation state of glycogen synthase in diabetic animals is always lower than that of normal animals. This suggests that the system that activates glycogen synthase (synthase phosphatase activity) is impaired in the diabetic state. The permissive effect of fructose is probably exerted through its capacity to increase the G6-P/ATP ratio which may partially increase synthase phosphatase activity, rendering glycogen synthase active.