Glucocorticoid induced alterations in carbohydrate metabolism can result in hyperglycemia. We evaluated changes in carbohydrate metabolism produced by four days of prednisone (20 mg PO TID) measuring insulin sensitivity, basal glucose, basal insulin and first phase insulin release (FPIR). We correlated these measures of carbohydrate metabolism with changes in free fatty acids and lactate levels both of which have been reported to be possible mediators of insulin sensitivity. Insulin sensitivity decreased by 64% (p = 0.002), basal insulin levels increased 50% (p = 0.026), FPIR tripled (p = 0.064) while fasting glucose levels increased significantly but remained normal. Basal FFAs levels increased (p = 0.045) while lactate levels did not change significantly, and neither predicted changes in SI. Basal levels of SI and FPIR were found to be independent predictors of change in insulin sensitivity and together explained 83% of the change in insulin sensitivity produced by short term treatment with prednisone.