The molecular mechanisms underlying increased hepatic phosphoenolpyruvate carboxykinase (PEPCK) gene transcription and gluconeogenesis in type II diabetes are largely unknown, To examine the involvement of glucocorticoids and the cis-acting insulin response sequence (IRS, -416/-407) in the genetically obese db/db mouse model, we generated crosses between C57BL/KsJ-db/+ mice and transgenic mice that express -460 or -2000 base pairs of the rat PEPCK gene promoter containing an intact or mutated IRS, linked to a reporter gene. Transgenic mice expressing the intact PEPCK(460)-CRP (C-reactive protein) transgene bred to near homozygosity at the db locus were obese, hyperinsulinemic, and developed fasting hyperglycemia (389 +/- 26 mg/100 ml) between 4 and 10 weeks of age, Levels of CRP reporter gene expression were increased 2-fold despite severe hyperinsulinemia compared with non-diabetic non-obese transgenic mice, Reporter gene expression was also increased 2-fold in transgenic obese diabetic db/db mice bearing a mutation in the IRS, -2000(IRS)-hGx, compared with non-obese non-diabetic transgenic 2000(IRS)-hGx mice. Treatment of obese diabetic db/db transgenic mice with the glucocorticoid receptor blocker RU 486 decreased plasma glucose by 50% and reduced PEPCK, GLUT2, glucose-6-phosphatase, tyrosine aminotransferase, CRP, and hGx reporter gene expression to levels similar to those of non-obese normoglycemic transgenic mice, Taken together, these results establish that -460 bp of 5'-flanking sequence is sufficient to mediate the induction of PEPCK gene transcription in genetically obese db/db mice during the development of hyperglycemia, The results further demonstrate that the mechanism underlying increased expression of gluconeogenic enzymes in the db/db mouse requires the action of glucocorticoids and occurs independently of factors acting through the PEPCK IRS (-416/-407) promoter binding site.