In a recent study we have demonstrated that 3T3-L1 adipocytes exposed to low micromolar H2O2 concentrations display impaired insulin stimulated GLUT4 translocation from internal membrane pools to the plasma membrane (Rudich, A., Tirosh, A., Potashnik, R., Hemi, R., Kannety, H., and Bashan, N. (1998) Diabetes 47, 1562-1569). In this study we further characterize the cellular mechanisms responsible for this observation. Two-hour exposure to ~25 μM H2O2 (generated by adding glucose oxidase to the medium) resulted in disruption of the normal insulin stimulated insulin receptor substrate (IRS)-1 and phosphatidylinositol (PI) 3-kinase cellular redistribution between the cytosol and an internal membrane pool (low density microsomal fraction (LDM)). This was associated with reduced insulin-stimulated IRS-1 and p85-associated PI 3-kinase activities in the LDM (84 and 96% inhibition, respectively). The effect of this finding on the downstream insulin signal was demonstrated by a 90% reduction in insulin stimulated protein kinase B (PKB) serine 473 phosphorylation and impaired activation of PKBα and PKBγ. Both control and oxidized cells exposed to heat shock displayed a wortmannin insensitive PKB serine phosphorylation and activity. These data suggest that activation of PKB and GLUT4 translocation are insulin signaling events dependent upon a normal insulin induced cellular compartmentalization of PI 3-kinase and IRS-1, which is oxidative stress-sensitive. These findings represent a novel cellular mechanism for the induction of insulin resistance in response to changes in the extracellular environment.