Activation of the endogenous protein kinase Cs in human kidney fibroblast (293) cells was found in the present study to inhibit the subsequent ability of insulin to stimulate the tyrosine phosphorylation of an expressed insulin receptor substrate-1. This inhibition was also observed in an in vitro phosphorylation reaction if the insulin receptor and its substrate were both isolated from cells in which the protein kinase C had been activated. To test whether serine phosphorylation of the insulin receptor substrate-1 was contributing to this process, serine 612 of this molecule was changed to an alanine. The insulin-stimulated tyrosine phosphorylation and the associated phosphatidylinositol 3-kinase activity of the expressed mutant were found to be comparable to those of the expressed wild-type substrate. However, unlike the wild-type protein, activation of protein kinase C did not inhibit the insulin-stimulated tyrosine phosphorylation of the S612A mutant nor its subsequent association with phosphatidylinositol 3-kinase. Tryptic peptide mapping of in vivo labeled IRS-1 and the S612A mutant revealed that PMA stimulates the phosphorylation of a peptide from wild-type IRS-1 that is absent from the tryptic peptide maps of the S612A mutant. Moreover, a synthetic peptide containing this phosphoserine and its nearby tyrosine was found to be phosphorylated by the insulin receptor to a much lower extent than the same peptide without the phosphoserine. Activation of protein kinase C was found to stimulate by 10-fold the ability of a cytosolic kinase to phosphorylate this synthetic peptide as well as the intact insulin receptor substrate-1. Finally, cytosolic extracts from the livers of ob/ob mice showed an 8-fold increase in a kinase activity capable of phosphorylating this synthetic peptide, compared to extracts of livers from lean litter mates. These results indicate that activation of protein kinase C stimulates a kinase which can phosphorylate insulin receptor substrate-1 at serine 612, resulting in an inhibition of insulin signaling in the cell, posing a potential mechanism for insulin resistance in some models of obesity.