Summary Saturated fatty acids cause insulin resistance but the underlying molecular mechanism is still unknown. We examined the effect of saturated non-esterified fatty acids on insulin binding and action in transfected Rat-1 fibroblasts, which over-expressed human insulin receptors. Incubation with 1.0 mmol/l palmitate for 14 h did not affect insulin binding, insulin receptor autophosphorylation, insulin-stimulated tyrosine kinase activity toward poly(Glu4:Tyr1), pp185 and Shc phosphorylation and PI3-kinase activity in these cells. However, the dose response curve of insulin-stimulated glucose transport was right-shifted. Palmitate inhibited the maximally insulin-stimulated mitogen activated protein (MAP) kinase activity toward synthetic peptide to 7 % that of control. The palmitate treatment influenced neither cytosolic protein kinase A activity nor cAMP levels. These results suggested that 1) palmitate did not inhibit the early steps of insulin action from insulin binding to pp185 or Shc phosphorylation but inhibited insulin-stimulated MAP kinase, and that 2) palmitate decreased insulin sensitivity as manifested by inhibited insulin-stimulated glucose uptake. In conclusion, the mechanism of saturated non-esterified fatty acid induced insulin resistance in glucose uptake may reside at post PI3-kinase or Shc steps, including the level of MAP kinase activation. [Diabetologia (1997) 40: 894901]