Although increased hypothalamo-pituitary-adrenocortical (HPA) activity has been reported in diabetic patients, the mechanisms underlying hyperactivation are still unclear. We investigated whether alterations in pituitary, adrenal and/or glucocorticoid negative feedback sensitivity in diabetes are responsible for 1) the impaired HPA response to stress and 2) basal hyperactivation of the HPA axis. Normal control, untreated streptozotocin-diabetic and insulin-treated diabetic rats were chronically catheterized. Eight days following surgery, pituitary-adrenal function was monitored throughout the day. Stress responsiveness was evaluated using 20 min of restraint on d 10. Thereafter, the rats were treated with CRH (0.5 μg/kg), ACTH_1–24 (75ng/kg) or dexamethasone (25 μg/kg) iv on d 12, 14, and 16 to evaluate pituitary, adrenal and glucocorticoid feedback sensitivity, respectively. Plasma ACTH and corticosterone (B) concentrations in untreated diabetic rats were significantly higher at 0800 h, but no different at 1300 h or 1800 h. Insulin treatment of diabetic rats normalized ACTH and B concentrations at 0800 h. The pituitary-adrenal response to restraint was greatly diminished in untreated diabetic rats, whereas insulin treatment partially restored this response in diabetic rats. Administration of CRH and ACTH revealed reduced pituitary and adrenal sensitivity in untreated diabetic animals compared with both control and insulin-treated diabetic animals. The dexamethasone suppression test indicated decreased glucocorticoid negative feedback sensitivity in diabetic rats, which was restored with insulin treatment. In conclusion, these studies demonstrate that: 1) impaired stress responsiveness of the diabetic HPA axis involves both decreased pituitary and adrenal sensitivity; and 2) basal hyperactivation of the diabetic HPA axis in the morning is due, in part, to decreased glucocorticoid negative feedback sensitivity.