Free fatty acids (FFA) are commonly elevated in diabetes and obesity and have been shown to impair nitric oxide (NO) production by endothelial cells. However, the signaling pathways responsible for FFA impairment of NO production in endothelial cells have not been characterized. Insulin receptor substrate-1 (IRS-1) regulation is critical for activation of endothelial nitric oxide synthase (eNOS) in response to stimulation by insulin or fluid shear stress. We demonstrate that insulin-mediated tyrosine phosphorylation of IRS-1 and serine phosphorylation of Akt, eNOS, and NO production are significantly inhibited by treatment of bovine aortic endothelial cells with 100 micromol/L FFA composed of palmitic acid for 3 hours before stimulation with 100 nM insulin. This FFA preparation also increases, in a dose-dependent manner, IKKbeta activity, which regulates activation of NF- kappaB, a transcriptional factor associated with inflammation. Similarly, elevation of other common FFA such as oleic and linoleic acid also induce IKKbeta activation and inhibit insulin-mediated eNOS activation. Overexpression of a kinase inactive form of IKKbeta blocks the ability of FFA to inhibit insulin-dependent NO production, whereas overexpression of wild-type IKKbeta recapitulates the effect of FFA on insulin-dependent NO production. Elevated levels of common FFA found in human serum activate IKKbeta in endothelial cells leading to reduced NO production, and thus may serve to link pathways involved in inflammation and endothelial dysfunction.