The initial response of liver cells to insulin is mediated through exocytosis of Cl− channelcontaining vesicles and a subsequent opening of plasma membrane Cl − channels. Intracellular accumulation of fatty acids leads to profound defects in metabolism, and is closely associated with insulin resistance. It is not known whether the activity of Cl − channels is altered in insulin resistance and by which mechanisms. We studied the effects of fatty acid accumulation on Cl − channel opening in a model liver cell line. Overnight treatment with amiodarone increased the fat content by ∼2-fold, and the rates of gluconeogenesis by ∼5-fold. The ability of insulin to suppress gluconeogenesis was markedly reduced indicating that amiodarone treatment induces insulin resistance. Western blot analysis showed that these cells express the same number of insulin receptors as control cells. However, insulin failed to activate exocytosis and Cl − channel opening. These inhibitory effects were mimicked in control cells by exposures to arachidonic acid (15 µM). Further studies demonstrated that fatty acids stimulate the PKC activity, and inhibition of PKC partially restored exocytosis and Cl − channel opening in insulin-resistant cells. Accordingly, activation of PKC with PMA in control cells potently inhibited the insulin responses. These results suggest that stimulation of PKC activity in insulin resistance contributes to the inhibition of cellular responses to insulin in liver cells.