The hypothalamus integrates nutrient and hormonal signals of body energy status, which result in altered neuronal responses that act to maintain energy homeostasis. As this brain region plays an important role in the control of body fat content and peripheral glucose levels, defects in this system could, at least in part, account for loss of homeostatic mechanisms resulting in increased adiposity and excessive plasma glucose levels. Type 2 diabetes is characterized by multiple defects in insulin action and glucose sensing, resulting in fasting hyperglycaemia. These high levels of glucose are mainly determined by increased hepatic glucose production, through increased gluconeogenesis. Consequently, an understanding of the mechanisms by which hepatic glucose production is controlled has important implications for the potential treatment of diabetes. Although leptin exhibits glucose lowering actions in rodents, insulin appears to play a dominant role in the central control of glucose metabolism. Numerous studies have concluded that insulin inhibits hepatic glucose production by both direct and indirect actions. A recently promulgated indirect site of action for insulin modulation of hepatic glucose production in rodents is the hypothalamus. It has been suggested that insulin reduces hepatic glucose output by altering hypothalamic neuron activity resulting in modified vagal control of liver gluconeogenic enzyme levels. Blockade of insulin signalling in the hypothalamus by delivery of insulin antibody, knockdown of insulin receptor by antisense oligonucleotides or inhibition of phosphatidylinositol 3-kinase all decrease the ability of insulin to suppress hepatic glucose production. Furthermore, this central effect of insulin is blocked by administration of glibenclamide, an inhibitor of ATP-sensitive potassium (KATP) channels. Hypothalamic administration of diazoxide or oleic acid also inhibits hepatic glucose output and gluconeogenesis through increased KATP activity, and mice lacking the KATP channel subunit, SUR1 exhibit an impaired ability for hypothalamic insulin to suppress hepatic gluconeogenesis. It is also proposed that the activation of hypothalamic KATP channels is involved in the counter-regulatory response to hypoglycaemia. Here the fall in plasma glucose levels is detected by the hypothalamus and results in activation of counter-measures such as enhanced secretion of adrenaline and glucagon, which increase hepatic glycogenolysis and reduce insulin secretion, ultimately increasing glucose availability to the brain. Thus, KATP channels are critical components of the sensing-transduction mechanisms by which hypothalamic neurons respond to changes in nutrient (glucose and fatty acids) and hormone (leptin and insulin) levels that initiate corrective neural-mediated peripheral responses to maintain glucose homeostasis. However, the molecular mechanisms and identities of the individual hypothalamic neurons and circuits responsible for these compensatory feedback systems are presently unclear. Using a combination of biochemical and electrophysiological methods, we are examining the actions of leptin, insulin and fatty acids and of altered glucose concentration on arcuate neuron signalling mechanisms and electrical activity. Two main signalling pathways have been targeted, PI3K and AMPK, as these have been reported to play key roles in the transduction of both hormone and nutrient signals in the hypothalamus. However, biochemical analysis of signalling and electrophysiological examination of unidentified neurons, although informative about mechanisms generally, do not reveal the hypothalamic neurons and pathways responsible for specific outputs. Evidence has implicated the NPY/AgRP and POMC neurons in the ARC as mediators of the central actions of insulin (and leptin) in the control of food intake and body weight. Central administration of NPY increases hepatic gluconeogenesis and weakens insulin suppression of hepatic glucose output. Conversely, activation of hypothalamic melanocortin receptors increases the rate of hepatic gluconeogenesis, whereas administration of melanocortin-4 receptor antagonist decreases hepatic glucose output. As leptin and insulin inhibit NPY and increase POMC hypothalamic gene expression, these neuron types also appear attractive candidates as central mediators of peripheral glucose. However, changes in neuronal peptide expression may not directly equate with neuronal functional outcomes, which are more likely to be dependent upon changes in neuron electrical activity. Our recent findings on the electrophysiological sensitivity of these neurons to leptin, insulin and glucose will be presented and discussed in relation to their potential physiological significance.