Insulin resistance is very common in the elderly, and may be associated with glucose intolerance or frank diabetes. In previous studies we demonstrated that insulin resistance in old Wistar rats is associated with decreased autophosphorylation and activation of the hepatic insulin receptor kinase (IRK) in vivo. We now show that this defect can be reproduced in vitro, where the extent of insulin-induced activation of IRK in liver membranes of old rats was decreased by approximately 50% compared with young controls. The defect could be largely abolished after solubilization of the membranes with Triton X-100. We also show that: (a) the viscosity of membranes from the old rats was significantly (P < 0.001, n = 4) higher (by 15%) compared with young controls; (b) incubation of plasma membranes from old animals with lecithin liposomes, which lowered their cholesterol levels, partially abolished the defect in IRK activation; and (c) Triton extracts of liver membranes prepared from old rats did not interfere with the activation of IRK derived from young controls. Additionally, non-membrane components did contribute to the development of this defect. We observed a significant (approximately 30%) (P < 0.001, n = 18) elevation of cytosolic protein tyrosine phosphatase (PTP) activity directed against the beta subunit of the insulin receptor in livers of old rats. No such elevation of PTP activity could be demonstrated with synthetic substrates. Our findings are consistent with a model in which increased membrane viscosity as well as enhancement of a cytosolic PTP activity both markedly inhibit the activation in vivo of the hepatic IRK in old animals.