Protein Phosphatase-1 (PP-1) appears to be the key component of the insulin signalling pathway which is responsible for bridging the initial insulin-simulated phosphorylation cascade with the ultimate dephosphorylation of insulin sensitive substrates. Dephosphorylations catalyzed by PP-1 activate glycogen synthase (GS) and simultaneously inactivate phosphorylase a and phosphorylase kinase promoting glycogen synthesis. Our in vivo studies using L6 rat skeletal muscle cells and freshly isolated adipocytes indicate that insulin stimulates PP-1 by increasing the phosphorylation status of its regulatory subunit (PP-1G). PP-1 activation is accompanied by an inactivation of Protein Phosphatase-2A (PP-2A) activity. To gain insight into the upstream kinases that mediate insulin-stimulated PP-1G phosphorylation, we employed inhibitors of the ras/MAPK, PI3-kinase, and PKC signalling pathways. These inhibitor studies suggest that PP-1G phosphorylation is mediated via a complex, cell type specific mechanism involving PI3-kinase/PKC/PKB and/or the ras/MAP kinase/Rsk kinase cascade. cAMP agonists such as SpcAMP (via PKA) and TNF-alpha (recently identified as endogenous inhibitor of insulin action via ceramide) block insulin-stimulated PP-1G phosphorylation with a parallel decrease of PP-1 activity, presumably due to the dissociation of the PP-1 catalytic subunit from the regulatory G-subunit. It appears that any agent or condition which interferes with the insulin-induced phosphorylation and activation of PP-1, will decrease the magnitude of insulin's effect on downstream metabolic processes. Therefore, regulation of the PP-1G subunit by site-specific phosphorylation plays an important role in insulin signal transduction in target cells. Mechanistic and functional studies with cell lines expressing PP-1G subunit site-specific mutations will help clarify the exact role and regulation of PP-1G site-specific phosphorylations on PP-1 catalytic function.