Glucose transport into muscle is the initial process in glucose clearance and is uniformly defective in insulin-resistant conditions of obesity, metabolic syndrome, and Type II diabetes mellitus. Insulin regulates glucose transport by activating insulin receptor substrate-1 (IRS-1)-dependent phosphatidylinositol 3-kinase (PI3K) which, via increases in PI-3,4,5-triphosphate (PIP(3)), activates atypical protein kinase C (aPKC) and protein kinase B (PKB/Akt). Here, we review (i) the evidence that both aPKC and PKB are required for insulin-stimulated glucose transport, (ii) abnormalities in muscle aPKC/PKB activation seen in obesity and diabetes, and (iii) mechanisms for impaired aPKC activation in insulin-resistant conditions. In most cases, defective muscle aPKC/PKB activation reflects both impaired activation of IRS-1/PI3K, the upstream activator of aPKC and PKB in muscle and, in the case of aPKC, poor responsiveness to PIP(3), the lipid product of PI3K. Interestingly, insulin-sensitizing agents (e.g., thiazolidinediones, metformin) improve aPKC activation by insulin in vivo and PIP3 in vitro, most likely by activating 5'-adenosine monophosphate-activated protein kinase, which favorably alters intracellular lipid metabolism. Differently from muscle, aPKC activation in the liver is dependent on IRS-2/PI3K rather than IRS-1/PI3K and, surprisingly, the activation of IRS-2/PI3K and aPKC is conserved in high-fat feeding, obesity, and diabetes. This conservation has important implications, as continued activation of hepatic aPKC in hyperinsulinemic states may increase the expression of sterol regulatory element binding protein-1c, which controls genes that increase hepatic lipid synthesis. On the other hand, the defective activation of IRS-1/PI3K and PKB, as seen in diabetic liver, undoubtedly and importantly contributes to increases in hepatic glucose output. Thus, the divergent activation of aPKC and PKB in the liver may explain why some hepatic actions of insulin (e.g., aPKC-dependent lipid synthesis) are increased while other actions (e.g., PKB-dependent glucose metabolism) are diminished. This may explain the paradox that the liver secretes excessive amounts of both very low density lipoprotein triglycerides and glucose in Type II diabetes. Previous reviews from our laboratory that have appeared in the Proceedings have provided essentials on phospholipid-signaling mechanisms used by insulin to activate several protein kinases that seem to be important in mediating the metabolic effects of insulin. During recent years, there have been many new advances in our understanding of how these lipid-dependent protein kinases function during insulin action and why they fail to function in states of insulin resistance. The present review will attempt to summarize what we believe are some of the more important advances.