A hyperglycemic and hyperinsulinemic environment characteristic of type 2 diabetes causes insulin resistance. In adipocytes, defects in both insulin sensitivity and maximum response of glucose transport have been demonstrated. To investigate the molecular mechanisms, freshly isolated rat adipocytes were incubated in control (5.6 mM glucose, no insulin) and high glucose (20 mM)/high insulin (100 nM) (HG/HI) for 18 hours to induce insulin resistance. Insulin-resistant adipocytes manifested decreased sensitivity of glucose uptake associated with defects in insulin receptor substrate (IRS)-1 Tyr phosphorylation, association of p85 subunit of phosphatidylinositol-3-kinase, Akt Ser473 and Thr308 phosphorylation, accompanied by impaired glucose transporter 4 translocation. In contrast, protein kinase C (PKC)-ζ activity was augmented by chronic HG/HI. Inhibition of PKC-ζ with a specific cell-permeable peptide reversed the signaling defects and insulin sensitivity of glucose uptake. Transfection of dominant-negative, kinase-inactive PKC-ζ blocked insulin resistance, whereas constitutively active PKC-ζ recapitulated the defects. The HG/HI incubation was associated with stimulation of IRS-1 Ser318 and Akt Thr34 phosphorylation, targets of PKC-ζ. Transfection of IRS-1 S318A and Akt T34A each partially corrected insulin signaling, whereas combined transfection of both completely normalized insulin signaling. In vivo hyperglycemia/hyperinsulinemia in rats for 48 hours similarly resulted in activation of PKC-ζ and increased phosphorylation of IRS-1 Ser318 and Akt Thr34. These data indicate that impairment of insulin signaling by chronic HG/HI is mediated by dual defects at IRS-1 and Akt mediated by PKC-ζ.