Non-esterified fatty acid (free fatty acid)-induced activation of the novel PKC (protein kinase C) isoenzymes PKCdelta and PKCtheta correlates with insulin resistance, including decreased insulin-stimulated IRS-1 (insulin receptor substrate-1) tyrosine phosphorylation and phosphoinositide 3-kinase activation, although the mechanism(s) for this resistance is not known. In the present study, we have explored the possibility of a novel PKC, PKCdelta, to modulate directly the ability of the insulin receptor kinase to tyrosine-phosphorylate IRS-1. We have found that expression of either constitutively active PKCdelta or wild-type PKCdelta followed by phorbol ester activation both inhibit insulin-stimulated IRS-1 tyrosine phosphorylation in vivo. Activated PKCdelta was also found to inhibit the IRS-1 tyrosine phosphorylation in vitro by purified insulin receptor using recombinant full-length human IRS-1 and a partial IRS-1-glutathione S-transferase-fusion protein as substrates. This inhibition in vitro was not observed with a non-IRS-1 substrate, indicating that it was not the result of a general decrease in the intrinsic kinase activity of the receptor. Consistent with the hypothesis that PKCdelta acts directly on IRS-1, we show that IRS-1 can be phosphorylated by PKCdelta on at least 18 sites. The importance of three of the PKCdelta phosphorylation sites in IRS-1 was shown in vitro by a 75-80% decrease in the incorporation of phosphate into an IRS-1 triple mutant in which Ser-307, Ser-323 and Ser-574 were replaced by Ala. More importantly, the mutation of these three sites completely abrogated the inhibitory effect of PKCdelta on IRS-1 tyrosine phosphorylation in vitro. These results indicate that PKCdelta modulates the ability of the insulin receptor to tyrosine-phosphorylate IRS-1 by direct phosphorylation of the IRS-1 molecule.