Several dominant mutations at the agouti locus in the mouse cause a syndrome of marked obesity, hyperinsulinemia, and insulin resistance. Although it is known that the agouti gene is expressed in an ectopic manner in these mutants, the precise mechanism by which the agouti gene product mediates these effects is unclear. Since intracellular Ca2+ is believed to play a role in mediating insulin action and dysregulation of Ca2+ flux is observed in diabetic animals and humans, we examined the status of intracellular Ca2+ in mice carrying the dominant agouti allele, viable yellow (Avy). We show here that in mice carrying this mutation, the intracellular free calcium concentration ([Ca2+]i) is elevated in skeletal muscle, and the degree of elevation is closely correlated with the degree to which the mutant traits are expressed in individual animals. Moreover, we demonstrate that the agouti gene product is capable of inducing increased [Ca2+]i in cultured and freshly isolated skeletal muscle myocytes from wild-type mice. Based on these findings, we present a model in which we propose that the agouti polypeptide promotes insulin resistance in mutant animals through its ability to increase [Ca2+]i.