Insulin resistance, type II Diabetes, and obesity are characterized by elevated free fatty acids.in vivo.Insulin induces She phosphorylation and movement to the rytosol where it interacts with the Grb2-Sos complex. She also associates with acidic phospholipids via its phosphotyrosine binding (PTB) domain at tho plasma membrane (PM). Using a unique in vitro model of fatty acid-induced insulin resistance, shown by us previously to have a GLUT4-activation defect, we determined the phosphorylation and subceliular location of She to be altered in an insulin-mimetic manner.Subceliular tyrosine phosphatase activity is reduced in the cytosol and PM under both basal and insulin-stimulated conditions. This inhibition may allow tyrosine phosphorylation of proximal insulin signaling proteins to be increased as seen in studies utilizing vanadate. Upon exposure to palmitate (16:0), all splice varients of She move from the P M to the rytosolic fraction. In addition, the phosphorylation of p52-Shc is increased '2.6 fold versus 3-fold following insulin stimulation alone. When palmitate-treated cells are stimulated with insulin. She phosphorylation increases only 1.5-fold which indicates palmitate inhibits the insulin-induced tyrosine phosphorylation of She. Possible interactions between increased intracellular levels of lipids, such as palmitate, may disrupt She's PTB domain interactions with the PM and thereby prevent adequate interactions with the insulin receptor. The reduction of glucose transport and increased She phosphorylation by palmitate indicate that Shr may be involved in a signaling cascade leading to GH'TJ activation.