Revised ABSTRACT: The onset of insulin resistance is a hallmark of metabolic syndrome and its complications. Together with other tissues (the adipose and the muscle) liver also becomes insulin resistant, thus contributing to the onset of hyperglycemia and type II diabetes. The mechanisms of hepatic insulin resistance are not well understood; but ceramide, a bioactive lipid metabolite is considered one of the main culprits. Drugs targeting pathways for ceramide de novo synthesis have shown effectiveness in ameliorating aspects of metabolic syndrome in the mouse. These approaches however typically exert a very broad effect on all sphingolipids, both structural and bioactive, instead on ceramide alone. Due to the diverse roles that ceramide play in metabolic “health” of hepatocytes, the range of subcellular locations where it resides, and the variety of metabolic pathways for its generation, specific approaches to target distinct ceramide effects are needed for successful translation to the clinic, but are not available at the moment. The hypothesis to be tested in this proposal is that an enzyme called Neutral Sphingomyelinase-2 (nSMase-2, gene name smpd3), one of four distinct enzymes that can generates ceramide by the turnover of sphingomyelin, plays an unique role in the regulation of the insulin response of hepatocytes. This hypothesis is supported by strong preliminary data documenting its key aspects. The proposed plan will identify the underlying mechanisms of this novel signaling axis in cellular response to insulin. Aim 1 will decipher the impact of nSMase-2 at the plasma membrane on ceramide homeostasis and insulin signaling in vitro. Aim 2 is to test the cause-effect relationship between nSMase-2 and insulin resistance in vivo, and examine the impact of ceramide generated at the plasma membrane on de novo lipogenesis, lipid secretion, lipotoxicity and gluconeogenesis in vivo. A recently developed liver specific knockout mouse will be used in these studies.