A major problem in the insulin therapy of patients with diabetes type 2 (T2DM) is the increased occurrence of hypoglycemic events which, if left untreated, may cause confusion or fainting and in severe cases seizures, coma and even death. To elucidate the potential contribution of the liver to hypoglycemia in T2DM we applied a detailed kinetic model of human hepatic glucose metabolism to simulate changes in glycolysis, gluconeogenesis and glycogen metabolism induced by deviations of the hormones insulin, glucagon and epinephrine from their normal plasma profiles. Our simulations reveal in line with experimental and clinical data from a multitude of studies in T2DM (i) significant changes in the relative contribution of glycolysis, gluconeogenesis, and glycogen metabolism to hepatic glucose production and hepatic glucose utilization (ii) decreased postprandial glycogen storage as well as increased glycogen depletion in overnight fasting and short term fasting (iii) a shift of the set-point defining the switch between hepatic glucose production and hepatic glucose utilization to elevated plasma glucose levels, respectively in T2DM relative to normal, healthy subjects. Intriguingly, our model simulations predict a restricted gluconeogenic response of the liver under impaired hormonal signals observed in T2DM, resulting in an increased risk of hypoglycemia. The inability of hepatic glucose metabolism to effectively counterbalance a decline of the blood glucose level becomes even more pronounced in case of tightly controlled insulin treatment. Given this Janus face mode of action of insulin, our model simulations underline the great potential that normalization of the plasma glucagon profile may have for the treatment of T2DM.