The process of neurodegeneration in Alzheimer’s disease has been associated with a disruption of insulin signaling cascade in neurons, and to insulin resistance. T2DM correlates with Alzheimer’s disease, but mechanisms of interaction are unknown. We have developed a mouse model of tau induced neurodegeneration expressing pseudo-phosphorylated tau [Pathological Human Tau (PH-Tau)] in neurons. This model (PH-Tau-Tg) recapitulated cognitive decline and neurodegeneration observed in AD. In this study we examined if expression of PH-Tau could affect neuronal excitability and insulin receptor signaling. Neuronal excitability was investigated using intracerebral recordings of extracellular field potentials from prefrontal cortex after insulin and kainic acid (KA) injection. Analysis of baseline recordings indicated an increased excitability of PH-Tau-Tg as evidenced by higher spectrum densities (PSDs) of high frequencies brain waves. Injection of insulin (1IU, s.c) led to a decrease of fast ripples PSDs, more pronounced in PH-Tau-Tg mice than controls. Subsequent injection of kainic acid (KA, 5 mg/kg, s.c) led to significant increase in firing rate, amplitude of extracellular field potentials and PSDs of high frequency brain waves in control mice only. To further investigate the role of insulin in PH-Tau-Tg mice, we subjected mice to a glucose tolerance test. We found that PH-Tau-Tg mice were significantly hyperglycemic prior to glucose injection. Interestingly, the PH-Tau-Tg mice showed a moderate increase at 30 min due to the higher baseline, indicating a low sensitivity of insulin receptor in these mice. This is consistent with increased levels of activated insulin receptors in the brain and the inhibitory effect of insulin on ictal activity post KA injection in PH-Tau-Tg mice. We suggest that these mice have reduced insulin sensitivity (hyperglycemia) and as a compensatory mechanism there is overactivation/expression of insulin receptor in the brain rendering neuronal circuits resistant to seizure induction after injection of insulin. These data indicate that insulin signal transduction pathway is altered in PH-Tau-Tg mice, and that injection of exogenous insulin reduces hypersynchronous bursting activity of field potentials recorded from cortical neuronal circuits. We propose that the appearance of abnormal tau might potentiate the toxic environment by interfering with the insulin signaling cascade in the brain of patients with Alzheimer’s disease.