Previously, we reported that prolonged arsenic exposure impaired neuronal insulin signaling. Here we have further identified novel molecular mechanisms underlying neuronal insulin signaling impairment by arsenic. Arsenic treatment altered insulin dose-response curve and reduced maximum insulin response in differentiated human neuroblastoma SH-SY5Y cells, suggesting that arsenic hindered neuronal insulin signaling in a non-competitive like manner. Mechanistically, arsenic suppressed insulin receptor (IR) kinase activity, as witnessed by a decreased insulin-activated autophosphorylation of IR at Y1150/1151. Arsenic decreased the level of insulin receptor substrate 1 (IRS1) but increased the protein ratio between PI3K regulatory subunit, p85, and PI3K catalytic subunit, p110. Interestingly, co-immunoprecipitation demonstrated that arsenic did not alter a level of PI3K-p110/PI3K-p85 complex while increased PI3K-p85 levels in a PI3K-p110 depletion supernatant resulted from PI3K-p110 immunoprecipitation. These results indicated that arsenic increased PI3K-p85 which was free from PI3K-p110 binding. In addition, arsenic significantly increased interaction between IRS1 and PI3K-p85 but not PI3K-p110, suggesting that there may be a fraction of free PI3K-p85 interacting with IRS1. In vitro PI3K activity demonstrated that arsenic lowered PI3K activity in both basal and insulin-stimulated conditions. These results suggested that the increase in free PI3K-p85 by arsenic might compete with PI3K heterodimer for the same IRS1 binding site, in turn blocking the activation of its catalytic subunit, PI3K-p110. Taken together, our results provide additional insights into mechanisms underlying the impairment of neuronal insulin signaling by arsenic through the reduction of IR autophosphorylation, the increase in free PI3K-p85, and the impeding of PI3K activity.