Insulin degradation is a regulated process that plays a role in controlling insulin action by removing and inactivating the hormone. Abnormalities in insulin clearance and degradation are present in various pathological conditions including type 2 diabetes and obesity and may be important in producing clinical problems. The uptake, processing, and degradation of insulin by cells is a complex process with multiple intracellular pathways. Most evidence supports IDE as the primary degradative mechanism, but other systems (PDI, lysosomes, and other enzymes) undoubtedly contribute to insulin metabolism. Recent studies support a multifunctional role for IDE, as an intracellular binding, regulatory, and degradative protein. IDE increases proteasome and steroid hormone receptor activity, and this activation is reversed by insulin. This raises the possibility of a direct intracellular interaction of insulin with IDE that could modulate protein and fat metabolism. The recent findings would place intracellular insulin-IDE interaction into the insulin signal transduction pathway for mediating the intermediate effects of insulin on fat and protein turnover.