Routine consumption of alcohol at low doses is associated with decreased risk of acquiring type 2 diabetes, whereas chronic and excessive alcohol consumption increases the risk. Although there is good epidemiologic evidence for these biphasic effects, careful validation of these effects on insulin signaling has not been reported, nor have biological mechanisms underlying these biphasic effects been proposed. In this study, we provide evidence in rats that low-dose alcohol intake (4 g/kg x d) enhances hepatic insulin signaling by suppressing p55gamma (a phosphatidylinositol 3-kinase regulatory subunit isoform) at the posttranscriptional level, leading to the increased association of the phosphatidylinositol 3-kinase catalytic subunit (p110) with insulin receptor substrate-1 (P < 0.05) and subsequent activation of downstream effectors such as Akt, glycogen synthase kinase 3beta, and nuclear sterol regulatory element binding protein (SREBP)-1. These results, combined with our previous data (confirmed in the present study) demonstrating that ethanol intake at high doses (13 g/kg x d) disrupts hepatic insulin signaling by inducing TRB3, a mammalian homolog of Drosophila (tribbles-related protein 3) that prevented activation of downstream effectors (such as Akt, GSK3beta, and nSREBP-1), provide clear mechanistic validation of the biphasic effects of ethanol on insulin signaling. We also report that ethanol induction of TRB3 can be partially blocked (P < 0.01) by compounds (4-phenyl butyric acid and taurine-ursodeoxycholic acid) known to reduce endoplasmic reticulum stress. Thus, alcohol exerts biphasic actions on hepatic insulin signaling, such that low doses activate insulin signaling pathways associated with reduced p55gamma to increase nSREBP-1, whereas high doses of ethanol elevate TRB3 and suppress insulin signaling to decrease SREBP-1.