Accumulation of hepatic triacylglycerol (TG) is associated with obesity and metabolic syndrome, which are important pathogenic factors in the development of type 2 diabetes. In this narrative review, we summarize the effects of hepatic TG accumulation on hepatic glucose and insulin metabolism and the underlying molecular regulation in order to highlight the importance of hepatic TG accumulation for whole-body glucose metabolism. We find that liver fat accumulation is closely linked to impaired insulin-mediated suppression of hepatic glucose production and reduced hepatic insulin clearance. The resulting systemic hyperinsulinemia has a major impact on whole-body glucose metabolism and may be an important pathogenic step in the development of type 2 diabetes.