Significance The liver is a source of excess lipid, atherogenic lipoproteins, and glucose in patients with type 2 diabetes. These factors predispose to micro- and macrovascular complications. The underlying pathophysiology is not well understood, and mechanistic insight into it may provide better tools to prevent, treat, and reverse the disease. Here, we propose an alternative explanation for this pathophysiologic conundrum by illustrating a transcriptional “logic” underlying the regulation of different classes of genes. These findings can be interpreted to provide an integrated stepwise model for the coexistence of lipid and glucose abnormalities in hepatic insulin resistance.