Data are reviewed that are consistent with the following working hypothesis that proposes a novel mechanism regulating insulin sensitivity, which when nonfunctional, leads to severe insulin resistance. Postprandial elevation in insulin levels activates a hepatic parasympathetic reflex release of a putative hepatic insulin-sensitizing substance (HISS), which activates glucose uptake at skeletal muscle. Insulin causes HISS release in fed but not fasted animals. The reflex is mediated by acetylcholine and involves release of nitric oxide in the liver. Interruption of the release of HISS is achieved by surgical denervation of the anterior hepatic nerve plexus, muscarinic receptor blockade, or nitric oxide synthase antagonism and leads to immediate severe insulin resistance. The nitric oxide donor, SIN-1, reverses L-NAME-induced insulin resistance. Denervation-induced insulin resistance is reversed by intraportal but not intravenous administration of acetylcholine or SIN-1. Liver disease is often associated with insulin resistance; the bile duct ligation model of liver disease results in parasympathetic neuropathy and insulin resistance that is reversed by intraportal acetylcholine. Possible relevance of this HISS-dependent control of insulin action to insulin resistance in diabetes, liver disease, and obesity is discussed.