The proline-rich Akt substrate of 40 kDa (PRAS40) is a component of the mammalian target of rapamycin complex 1 (mTORC1) and among the most prominent Akt substrates in skeletal muscle. Yet the cellular functions of PRAS40 are incompletely defined. This study assessed the function of PRAS40 in insulin action in primary human skeletal muscle cells (hSkMC). Insulin action was examined in hSkMC following small interfering RNA-mediated silencing of PRAS40 (also known as AKT1S1) under normal conditions and following chemokine-induced insulin resistance. PRAS40 knockdown (PRAS40-KD) in hSkMC decreased insulin-mediated phosphorylation of Akt by 50% (p < 0.05) as well as of the Akt substrates glycogen synthase kinase 3 (40%) and tuberous sclerosis complex 2 (32%) (both p < 0.05). Furthermore, insulin-stimulated glucose uptake was reduced by 20% in PRAS40-KD myotubes (p < 0.05). Exposing PRAS40-KD myotubes to chemokines caused no additional deterioration of insulin action. PRAS40-KD further reduced insulin-mediated phosphorylation of the mTORC1-regulated proteins p70S6 kinase (p70S6K) (47%), S6 (43%), and eukaryotic elongation 4E-binding protein 1 (100%), as well as protein levels of growth factor receptor bound protein 10 (35%) (all p < 0.05). The inhibition of insulin action in PRAS40-KD myotubes was associated with a reduction in IRS1 protein levels (60%) (p < 0.05), and was reversed by pharmacological proteasome inhibition. Accordingly, expression of the genes encoding E3-ligases F-box protein 32 (also known as atrogin-1) and muscle RING-finger protein-1 and activity of the proteasome was elevated in PRAS40-KD myotubes. Inhibition of insulin action in PRAS40-KD myotubes was found to associate with IRS1 degradation promoted by increased proteasome activity rather than hyperactivation of the p70S6K-negative-feedback loop. These findings identify PRAS40 as a modulator of insulin action.