OBJECTIVE Both glucose and triglyceride production are increased in type 2 diabetes and nonalcoholic fatty liver disease (NAFLD). For decades, the leading hypothesis to explain these paradoxical observations has been selective hepatic insulin resistance wherein insulin drives de novo lipogenesis (DNL) while failing to suppress glucose production. Here, we aimed to test this hypothesis in humans. RESEARCH DESIGN AND METHODS We recruited obese subjects who met criteria for bariatric surgery with (n = 16) or without (n = 15) NAFLD and assessed 1) insulin-mediated regulation of hepatic and peripheral glucose metabolism using hyperinsulinemic-euglycemic clamps with [6,6-2H2]glucose, 2) fasting and carbohydrate-driven hepatic DNL using deuterated water (2H2O), and 3) hepatocellular insulin signaling in liver biopsy samples collected during bariatric surgery. RESULTS Compared with subjects without NAFLD, those with NAFLD demonstrated impaired insulin-mediated suppression of glucose production and attenuated—not increased—glucose-stimulated/high-insulin lipogenesis. Fructose-stimulated/low-insulin lipogenesis was intact. Hepatocellular insulin signaling, assessed for the first time in humans, exhibited a proximal block in insulin-resistant subjects: Signaling was attenuated from the level of the insulin receptor through both glucose and lipogenesis pathways. The carbohydrate-regulated lipogenic transcription factor ChREBP was increased in subjects with NAFLD. CONCLUSIONS Acute increases in lipogenesis in humans with NAFLD are not explained by altered molecular regulation of lipogenesis through a paradoxical increase in lipogenic insulin action; rather, increases in lipogenic substrate availability may be the key.