To investigate the mechanism of the cellular insulin insensitivity of diabetic rats, insulin binding, glucose transport, and glucose oxidation were studied in adipocytes from streptozotocin-diabetic rats. Increased insulin binding was found in cells from diabetic rats, and this was due to an increased number of insulin receptors rather than a change in receptor affinity. Basal and insulin-stimulated glucose oxidation was decreased in adipocytes from diabetic rats when the data are expressed in absolute terms or as percent increased above basal. Although the absolute rate of basal and insulin-stimulated glucose transport was decreased in adipocytes from diabetic rats, the percent increase above basal of insulin-stimulated glucose transport was not decreased. In conclusion, although the cellular insulin insensitivity exists in adipocytes from diabetic rats, the number of insulin receptors was increased, coupling between insulin receptors and the glucose transport system is intact in adipocytes from diabetic rats, and a defect in intracellular glucose metabolism rather than glucose transport plays a major role in the insulin insensitivity of adipocytes from diabetic rats.