The ability of glycogen synthase kinase-3 (GSK-3) to phosphorylate insulin receptor substrate-1 (IRS-1) is a potential inhibitory mechanism for insulin resistance in type 2 diabetes. However, the serine site(s) phosphorylated by GSK-3 within IRS-1 had not been yet identified. Using an N-terminal deleted IRS-1 mutant and two IRS-1 fragments, PTB-11-320 and PTB-2 1-350, we localized GSK-3 phosphorylation site(s) within amino acid sequence 320-350. Mutations of serine 332 or 336, which lie in the GSK-3 consensus motif (SXXXS) within PTB-2 or IRS-1, to alanine abolished their phosphorylation by GSK-3. This suggested that Ser332 is a GSK-3 phosphorylation site and that Ser336 serves as the "priming" site typically required for GSK-3 action. Indeed, dephosphorylation of IRS-1 prevented GSK-3 phosphorylation. Furthermore, the phosphorylated peptide derived from the IRS-1 sequence was readily phosphorylated by GSK-3, in contrast to the nonphosphorylated peptide, which was not phosphorylated by the enzyme. When IRS-1 mutants S332AIRS-1, S336AIRS-1, or S332A/336AIRS-1 were expressed in Chinese hamster ovary cells overexpressing insulin receptors, their insulin-induced tyrosine phosphorylation levels increased compared with that of wild-type (WT) IRS-1. This effect was stronger in the double mutant S332A/336AIRS-1 and led to enhanced insulin-mediated activation of protein kinase B. Finally, immunoblot analysis with polyclonal antibody directed against IRS-1 phosphorylated at Ser332 confirmed IRS-1 phosphorylation in cultured cells. Moreover, treatment with the GSK-3 inhibitor lithium reduced Ser 332 phosphorylation, whereas overexpression of GSK-3 enhanced this phosphorylation. In summary, our studies identify Ser332 as the GSK-3 phosphorylation target in IRS-1, indicating its physiological relevance and demonstrating its novel inhibitory role in insulin signaling.