Insulin resistance is a common clinical feature of obesity and non-insulin-dependent diabetes mellitus, and is characterized by elevated serum levels of glucose, insulin, and lipids. The mechanism by which insulin resistance is acquired is unknown. We have previously demonstrated that upon chronic treatment of fibroblasts with insulin, conditions that mimic the hyperinsulinemia associated with insulin resistance, the membrane-associated insulin receptor  subunit is proteolytically cleaved, resulting in the generation of a cytosolic fragment of the  subunit, , and that the generation of  is inhibited by the thiol protease inhibitor E64 (Knutson, V. P. (1991) J. Biol. Chem. 266, 15656 -15662). In this report, we demonstrate that in 3T3-L1 adipocytes: 1) cytosolic  is generated by chronic insulin administration to the cells, and that E64 inhibits the production of ; 2) chronic administration of insulin to the adipocytes leads to an insulinresistant state, as measured by lipogenesis and glycogen synthesis, and E64 totally prevents the generation of this insulin-induced cellular insulin resistance; 3) E64 has no effect on the insulin-induced down-regulation of insulin receptor substrate-1, and therefore insulin resistance is not mediated by the down-regulation of insulin receptor substrate-1; 4) under in vitro conditions, partially purified  stoichiometrically inhibits the insulin-induced autophosphorylation of the insulin receptor  subunit; and 5) administration of E64 to obese Zucker fatty rats improves the insulin resistance of the rats compared to saline-treated animals. These data indicate that  is a mediator of insulin resistance, and the mechanism of action of  is the inhibition of the insulin-induced autophosphorylation of the  subunit of the insulin receptor.Insulin resistance is a characteristic clinical feature of a number of disease states, chief among them diabetes mellitus, and is associated with hyperglycemia, hyperinsulinemia, hyperlipidemia, and hypertension (reviewed in Refs. 1 and 2). The potential mechanisms by which cellular insulin resistance is generated are many: a mutation in the gene coding for the insulin receptor protein, resulting in a decreased expression of the protein; a decrease in the binding of insulin; a decrease in the number of insulin receptor molecules expressed on the plasma membrane of the target cell; or a so-called "post-receptor defect" in which there is a decreased interaction between the insulin receptor and downstream effector molecules.Natural mutations in the primary sequence of the insulin receptor have been identified in patients with extreme forms of insulin resistance (3, 4). Mutations in the extracellular ligand binding domain of the receptor have been shown to result in a decreased affinity of insulin for the receptor (5-9). Mutations have also been documented in the intracellular  subunit of the receptor, especially in the ATP binding domain and the autophosphorylation domain of the receptor protein, resulting in a decreased tyrosine kinase activity...