Homeostatic mechanisms in mammals respond to hormones and nutrients to maintain blood glucose levels within a narrow range. Caloric restriction causes many changes in glucose metabolism and extends lifespan; however, how this metabolism is connected to the ageing process is largely unknown. We show here that the Sir2 homologue, SIRT1--which modulates ageing in several species--controls the gluconeogenic/glycolytic pathways in liver in response to fasting signals through the transcriptional coactivator PGC-1alpha. A nutrient signalling response that is mediated by pyruvate induces SIRT1 protein in liver during fasting. We find that once SIRT1 is induced, it interacts with and deacetylates PGC-1alpha at specific lysine residues in an NAD(+)-dependent manner. SIRT1 induces gluconeogenic genes and hepatic glucose output through PGC-1alpha, but does not regulate the effects of PGC-1alpha on mitochondrial genes. In addition, SIRT1 modulates the effects of PGC-1alpha repression of glycolytic genes in response to fasting and pyruvate. Thus, we have identified a molecular mechanism whereby SIRT1 functions in glucose homeostasis as a modulator of PGC-1alpha. These findings have strong implications for the basic pathways of energy homeostasis, diabetes and lifespan.