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 h to induce insulin resistance. Insulin resistant adipocytes manifested decreased sensitivity of glucose uptake associated with defects in IRS-1 Tyr phosphorylation, association of p85 subunit of phosphatidylinositol-3-kinase, AktSer473 and Thr308 phosphorylation accompanied by impaired glucose transporter 4 translocation. In contrast, PKC-ζ activity was augmented by chronic HG/HI. Inhibition of PKC-ζ with a specific cell permeable peptide reversed the signalling defects and insulin sensitivity of glucose uptake. Transfection of dominant-negative kinase-inactive PKC-ζ blocked insulin resistance, while constitutively-active PKC-ζ recapitulated the defects. The HG/HI incubation was associated with stimulation of IRS-1Ser318 and AktThr34 phosphorylation, targets of PKC-ζ. Transfection of IRS-1S318A and AktT34A each partially corrected, while combined transfection of both completely normalized insulin signaling. In vivo hyperglycemia/hyperinsulinemia in rats, for 48h similarly resulted in activation of PKC-ζ and increased phosphorylation of IRS-1 Ser318 and AktThr 34. 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.