Renal podocyte apoptosis is an early event of diabetic nephropathy progression. Insulin action is critical for podocyte survival. Previous studies demonstrated that Src homology-2 domain-containing phosphatase-1 (SHP-1) is elevated in renal cortex of type 1 diabetic mice; we hypothesized that hyperglycemia-induced SHP-1 expression may affect insulin actions in podocytes. Type 1 diabetic Akita mice (Ins2 ϩ/C96Y ) developed elevated foot process effacement and podocyte apoptosis compared with control littermate mice (Ins2 ϩ/ϩ ). In contrast to Ins2 ϩ/ϩ mice, insulin-stimulated protein kinase B (Akt) and extracellular signal-regulated kinase (ERK) phosphorylation were remarkably reduced in renal podocytes of Akita mice. This renal insulin resistance was associated with elevated SHP-1 expression in the glomeruli. Cultured podocytes exposed to high glucose concentration (HG; 25 mM) for 96 h exhibited high levels of apoptotic markers and caspase-3/7 enzymatic activity. HG exposure raised mRNA and protein levels of SHP-1 and reduced the insulin-signaling pathway in podocytes. Overexpression of dominant-negative SHP-1 in podocytes prevented HG effects and restored insulin actions. Elevated SHP-1 expression induced by high glucose levels was directly associated with insulin receptor-␤ in vitro and in vivo to prevent insulin-stimulated Akt and ERK phosphorylation. In conclusion, our results showed that high levels of SHP-1 expression in glomeruli cause insulin resistance and podocyte loss, thereby contributing to diabetic nephropathy. insulin signaling; protein tyrosine phosphatase; insulin receptor-␤; Src homology-2 domain-containing phosphatase-1