Abstract Aims/hypothesis Normalisation of blood glucose in individuals with diabetes is recommended to reduce development of diabetic complications. However, risk of severe hypoglycaemia with intensive insulin therapy is a major obstacle that prevents many individuals with diabetes from obtaining the recommended reduction in HbA_1c. Inhibition of glucagon receptor signalling and liver-preferential insulin action have been shown individually to have beneficial effects in preclinical models and individuals with diabetes (i.e. improved glycaemic control), but also have effects that are potential safety risks (i.e. alpha cell hyperplasia in response to glucagon receptor antagonists and increased levels of liver triacylglycerols and plasma alanine aminotransferase activity in response to glucagon receptor antagonists and liver-preferential insulin). We hypothesised that a combination of glucagon inhibition and liver-preferential insulin action in a dual-acting molecule would widen the therapeutic window. By correcting two pathogenic mechanisms (dysregulated glucagon signalling and non-physiological distribution of conventional insulin administered s.c.), we hypothesised that lower doses of each component would be required to obtain sufficient reduction of hyperglycaemia, and that the undesirable effects that have previously been observed for monotreatment with glucagon antagonists and liver-preferential insulin could be avoided. Methods A dual-acting glucagon receptor inhibitor and liver-preferential insulin molecule was designed and tested in rodent models (normal rats, rats with streptozotocin-induced hyperglycaemia, db/db mice and mice with diet-induced obesity and streptozotocin-induced hyperglycaemia), allowing detailed characterisation of the pharmacokinetic and pharmacodynamic properties of the dual-acting molecule and relevant control compounds, as well as exploration of how the dual-acting molecule influenced glucagon-induced recovery and spontaneous recovery from acute hypoglycaemia. Results This molecule normalised blood glucose in diabetic models, and was markedly less prone to induce hypoglycaemia than conventional insulin treatment (approximately 4.6-fold less potent under hypoglycaemic conditions than under normoglycaemic conditions). However, compared to treatment with conventional long-acting insulin, this dual-acting molecule also increased triacylglycerol levels in the liver (approximately 60%), plasma alanine aminotransferase levels (approximately twofold) and alpha cell mass (approximately twofold). Conclusions/interpretation While the dual-acting glucagon receptor inhibitor and liver-preferential insulin molecule showed markedly improved regulation of blood glucose, effects that are potential safety concerns persisted in the pharmacologically relevant dose range. Graphical abstract