Why Does Fat in the Liver and Pancreas Cause Diabetes?

Updated July 2026

So far we’ve established that insulin resistance, prediabetes, and type 2 diabetes fall on one spectrum of glucose dysregulation, driven by chronic calorie excess. If you’re just joining the series, I’d encourage you to first read what these conditions are and how they develop.

How does the liver control blood sugar?

The liver stores glucose but prefers to release it into the bloodstream to keep the rest of the body fueled. If you recall, there are two main storage sites for glucose in our bodies – our muscles and our liver. Muscles like to store glucose because it’s the fuel that’s needed for our muscles to work. So our leg muscles will store glucose and instantly convert it to mechanical energy when we go for a run.

The liver stores glucose, but it doesn’t like to hold on to it very much. Instead, it wants to release it into the bloodstream so that glucose can be available to other organs. The liver’s instinct to release glucose into the bloodstream is a good thing. After all, the brain needs a constant energy supply, and glucose is the preferred fuel – even when we’re asleep and not eating.

What does the pancreas do to regulate glucose?

It makes insulin in precise amounts to tell the liver exactly how much glucose to release. In this context, the role of the pancreas is to make insulin in just the right amounts to dial in just the right release of glucose from the liver to keep blood sugars in a healthy range. High insulin levels are therefore expected after a meal containing simple, easily digested carbohydrates that are readily turned into glucose. At those times, we don’t need the liver to release much glucose since there’s already glucose in the bloodstream. The liver listens to the pancreas and holds on to its glucose stores.

How does a fatty liver cause insulin resistance?

When fat builds up in the liver, it stops hearing insulin, so the pancreas has to shout louder to keep blood sugar in check. But as we accumulate fat in the liver, it’s like the liver becomes hard-of-hearing and stops noticing the signals the pancreas is sending. As a result, it releases more glucose than it’s supposed to. To keep glucose in check, the pancreas starts to shout louder, releasing more insulin for any glucose elevation. At a high enough insulin level, the liver will be able to hear the pancreas again and will follow its command. At this stage, blood glucose levels are normal. HbA1C is normal. But it takes a lot more insulin to get there and insulin levels are abnormally high. This is insulin resistance.

Keep depositing fat in the liver and develop progressive liver deafness. Eventually you will reach a point where no matter how much insulin the pancreas can release, it’s not enough to control the liver’s desire to put glucose into the bloodstream. Blood sugars are now higher much of the time and HbA1C rises modestly. This is preDM.

How does a fatty pancreas lead to type 2 diabetes?

Once fat smothers the insulin-producing beta cells, insulin output falls no matter how high blood sugar climbs. Once fat starts to accumulate in the pancreas, glucose control really deteriorates. Fat in the pancreas starts to suffocate the “beta cells” that make insulin so that insulin production falls off regardless of circulating glucose levels. This is T2DM.

Here’s a really important and scary point – suffocate beta cells long enough and they might never recover. Which means at some point T2DM becomes irreversible.

How does fat in muscle affect blood sugar?

Muscle is the body’s other major glucose store, and fat inside it makes muscle refuse glucose too. Aside from the liver, muscle represents the next most important and large storage depot for glucose. Here, insulin works to stimulate uptake of glucose by muscle, thus helping to clear it from the bloodstream. As fat accumulates in and around muscle tissues, muscle becomes less interested in storing glucose, further impeding insulin’s ability to keep blood sugars in a normal range.

What is the glucose dysregulation spiral?

It’s the self-feeding loop in which excess glucose becomes still more fat in the very organs that are supposed to regulate glucose. Chronic excess calories culminate in us blowing past our personal subcutaneous fat threshold and, instead, depositing fat everywhere else, including in the liver, pancreas and muscle. Liver fat encourages glucose release into the bloodstream. Muscle fat puts up barriers for glucose to be stored in muscle. Pancreas fat impedes insulin production so glucose levels stay high.

End result? Your body is constantly flooded with excess glucose, and you have nowhere to store it. So what does the body do? What it’s always done with excess glucose – it turns it into fat. And puts that fat in the liver, pancreas and muscle, compounding the problem further.

Welcome to the negative, self-perpetuating spiral of blood glucose dysregulation.

Can the spiral be undone?

Yes — even after a diagnosis, the process can be interrupted and reversed. Even though all of that may sound pretty depressing, there is also much hope. Even if you’ve already been diagnosed with one of the conditions on the glucose dysregulation spectrum, you don’t need to just accept that as your fate or simply expect to just get worse over time.

Next up: the actions you can take today to undo IR, preDM, and even T2DM.

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