Incubation of rat hepatoma Fao cells with insulin leads to a transient rise in Tyr phosphorylation of insulin receptor substrate (IRS) proteins. This is followed by elevation in their P-Ser/Thr content, and their dissociation from the insulin receptor (IR). Wortmannin, a phosphatidylinositol 3-kinase (PI3K) inhibitor, abolished the increase in the P-Ser/Thr content of IRS-1, its dissociation from the IR, and the decrease in its P-Tyr content following 60 min of insulin treatment, indicating that the Ser kinases that negatively regulate IRS-1 function are downstream effectors of PI3K. PKCzeta fulfills this criterion, being an insulin-activated downstream effector of PI3K. Overexpression of PKCzeta in Fao cells, by infection of the cells with adenovirus-based PKCzeta construct, had no effect on its own, but it accelerated the rate of insulin-stimulated dissociation of IR.IRS-1 complexes and the rate of Tyr dephosphorylation of IRS-1. The insulin-stimulated negative regulatory role of PKCzeta was specific and could not be mimic by infecting Fao cells with adenoviral constructs encoding for PKC alpha, delta, or eta. Because the reduction in P-Tyr content of IRS-1 was accompanied by a reduced association of IRS-1 with p85, the regulatory subunit of PI3K, it suggests that this negative regulatory process induced by PKCzeta, has a built-in attenuation signal. Hence, insulin triggers a sequential cascade in which PI3K-mediated activation of PKCzeta inhibits IRS-1 functions, reduces complex formation between IRS-1 and PI3K, and inhibits further activation of PKCzeta itself. These findings implicate PKCzeta as a key element in a multistep negative feedback control mechanism of IRS-1 functions.