Fasting increases neuropeptide Y (NPY) expression, peptide levels and the excitability of NPY-expressing neurons in the hypothalamic arcuate (ARC) nucleus. A subpopulation of ARC-NPY neurons (~ 40%) are glucose-inhibited (GI)-type glucose sensing neurons. Hence, they depolarize in response to decreased glucose. Because fasting enhances NPY neurotransmission, we propose that during fasting GI neurons depolarize in response to smaller decreases in glucose. This increased excitation in response to glucose decreases would increase NPY-GI neuronal excitability and enhance NPY neurotransmission. Using an in vitro hypothalamic explant system, we show that fasting enhances NPY release in response to decreased glucose concentration. By measuring relative changes in membrane potential using a membrane potential sensitive dye, we demonstrate that during fasting, a smaller decrease in glucose depolarizes NPY-GI neurons. Furthermore, incubation in low (0.7 mM) glucose enhanced while leptin (10 nM) blocked depolarization of GI neurons in response to decreased glucose. Fasting, leptin and glucose-induced changes in NPY-GI neuron glucose sensing were mediated by 5'AMP activated protein kinase (AMPK). We conclude that during energy sufficiency, leptin reduces the ability of NPY-GI neurons to sense decreased glucose. However, after a fast, decreased leptin and glucose activates AMPK in NPY-GI neurons. As a result, NPY-GI neurons become depolarized in response to smaller glucose fluctuations. Increased excitation of NPY-GI neurons enhances NPY release. NPY, in turn, shifts energy homeostasis towards increased food intake and decreased energy expenditure in order to restore energy balance.