Insulin resistance is a common problem associated with infections and cancer and, most importantly, is the central component of non-insulin-dependent diabetes mellitus. We have recently shown that tumor necrosis factor (TNF) alpha is a key mediator of insulin resistance in animal models of non-insulin-dependent diabetes mellitus. Here, we investigate how TNF-alpha interferes with insulin action. Chronic exposure of adipocytes to low concentrations of TNF-alpha strongly inhibits insulin-stimulated glucose uptake. Concurrently, TNF-alpha treatment causes a moderate decrease in the insulin-stimulated autophosphorylation of the insulin receptor (IR) and a dramatic decrease in the phosphorylation of IR substrate 1, the major substrate of the IR in vivo. The IR isolated from TNF-alpha-treated cells is also defective in the ability to autophosphorylate and phosphorylate IR substrate 1 in vitro. These results show that TNF-alpha directly interferes with the signaling of insulin through its receptor and consequently blocks biological actions of insulin.