We hypothesized that insulin stimulates phosphorylation of CEACAM1 which in turn leads to upregulation of receptor-mediated insulin endocytosis and degradation in the hepatocyte. We have generated transgenic mice over-expressing in liver a dominant-negative, phosphorylation-defective S503A-CEACAM1 mutant. Supporting our hypothesis, we found that S503A-CEACAM1 transgenic mice developed hyperinsulinemia resulting from impaired insulin clearance. The hyperinsulinemia caused secondary insulin resistance with impaired glucose tolerance and random, but not fasting, hyperglycemia. Transgenic mice developed visceral adiposity with increased amounts of plasma free fatty acids and plasma and hepatic triglycerides. These findings suggest a mechanism through which insulin signaling regulates insulin sensitivity by modulating hepatic insulin clearance.