Aim: To examine the effect of ketogenic diet in T2D patients on glucose tolerance, beta cell function, insulin sensitivity and body fat content. Methods: 29 T2D subjects were randomized to receive for 10 days a weight maintaining diet containing: GROUP I - 30% protein, 50% CHO, 20% fat (n=8); GROUP II - isocaloric ketogenic diet with 15% protein, 5% CHO, 80% fat (n=10); GROUP III - isocaloric ketogenic diet plus ketone ester of β-OH-B, 8 grams every 8h (n=11). Subjects ate breakfast daily in the TDI Metabolic Kitchen and picked up food for lunch and dinner. Results: After 10 days, body weight remained constant: Group I (89.0 vs 89.0 kg), II (93.0 vs 92.5) and III (96.0 vs 97.0), as did body fat content. HbA1c and fructosamine did not change in any of the 3 groups. During OGTT, FPG, 2-h PG, mean PG, fasting PI, mean PI, [Delta]I/[Delta]G, and Matsuda index of insulin sensitivity did not change in Groups I, II, III. Subjects received a 2-step euglycemic insulin clamp (20 and 60 mU/m2.min) with 3-3H-glucose and indirect calorimetry. Before and after 10 days basal HGP and suppression of HGP (step I) were similar in all 3 groups. Insulin-stimulated glucose disposal (step 2) did not change in group I (4.23 vs 4.38 mg/kg.min), II (3.62 vs 3.55), or III (3.26 vs 3.35). After 10 days, basal lipid oxidation increased, while CHO oxidation decreased (both P<0.01) in groups II and III and was unchanged in group I. Disclosure A.Merovci: None. B.Finley: None. A.Chavez: None. A.A.Hansis-diarte: None. S.Neppala: None. D.Tripathy: None. R.A.Defronzo: Advisory Panel; AstraZeneca, Bayer Inc., Boehringer-Ingelheim, Novo Nordisk, Research Support; AstraZeneca, Boehringer-Ingelheim, Merck & Co., Inc., Speaker's Bureau; AstraZeneca.