The present studies were undertaken to assess the mechanisms responsible for cortisol-induced insulin resistance in man. The insulin dose-response characteristics for suppression of glucose production and stimulation of glucose utilization and their relationship to monocyte and erythrocyte insulin receptor binding were determined in six normal volunteers after 24-h infusion of cortisol and 24-h infusion of saline. The infusion of cortisol (2 microgram kg-1 min-1) increased the plasma cortisol concentration approximately 4-fold (37 +/- 3 vs. 14 +/- 1 microgram/dl; P less than 0.01) to values observed during moderately severe stress in man. This hypercortisolemia increased postabsorptive plasma glucose (126 +/- 2 vs. 97 +/- 2 mg/dl; P less than 0.01) and plasma insulin (16 +/- 2 vs. 10 +/- 2 microU/ml; P less than 0.01) concentrations and rates of glucose production (2.4 +/- 0.1 vs. 2.1 +/- -0.1 mg kg-1 min-1; P less than 0.01) and utilization (2.5 +/- 0.1 vs. 2.1 +/- 0.1 mg kg-1 min -1; P less than 0.01). Insulin dose-response curves for both suppression of glucose production (half-maximal response at 81 +/- 19 vs. 31 +/ 5 microU/ml; P less than 0.05) and stimulation of glucose utilization (half-maximal response at 104 +/- 9 vs. 64 +/- 7 microU/ml; P less than 0.01) were shifted to the right, with preservation of normal maximal responses to insulin. Neither monocyte nor erythrocyte insulin binding was decreased. However, except at near-maximal insulin receptor occupancy, the action of insulin on glucose production and utilization per number of monocyte and erythrocyte insulin receptors occupied was decreased. These results indicate that the cortisol-induced insulin resistance in man is due to the decrease in both hepatic and extrahepatic sensitivity to insulin. Assuming that insulin binding to monocytes and erythrocytes reflects insulin binding in insulin-sensitive tissues, this decrease in insulin action can be explained on the basis of a postreceptor defect.