In individuals with type 1 diabetes, hypoglycemia is a common consequence of overinsulinization. Under conditions of insulin-induced hypoglycemia, glucagon is the most important stimulus for hepatic glucose production. In contrast, during euglycemia, insulin potently inhibits glucagon’s effect on the liver. The first aim of the present study was to determine whether low blood sugar augments glucagon’s ability to increase glucose production. Using a conscious catheterized dog model, we found that hypoglycemia increased glucagon’s ability to overcome the inhibitory effect of insulin on hepatic glucose production by almost 3-fold, an effect exclusively attributable to marked enhancement of the effect of glucagon on net glycogen breakdown. To investigate the molecular mechanism by which this effect comes about, we analyzed hepatic biopsies from the same animals, and found that hypoglycemia resulted in a decrease in insulin signaling. Furthermore, hypoglycemia and glucagon had an additive effect on the activation of AMPK, which was associated with altered activity of the enzymes of glycogen metabolism.