Fat-induced hepatic insulin resistance plays a key role in the pathogenesis of type 2 diabetes in obese individuals. Although PKC and inflammatory pathways have been implicated in fat-induced hepatic insulin resistance, the sequence of events leading to impaired insulin signaling is unknown. We used Wistar rats to investigate whether PKC- and oxidative stress play causal roles in this process and whether this occurs via IKKβ- and JNK-dependent pathways. Rats received 7h infusion of Intralipid plus heparin (IH) to elevate circulating free fatty acids (FFA). During the last 2h of the infusion, hyperinsulinemic-euglycemic clamp with tracer was performed to assess hepatic and peripheral insulin sensitivity. An antioxidant, N-acetyl-L-cysteine (NAC), prevented IH-induced hepatic insulin resistance in parallel with prevention of decreased IBα content, increased JNK phosphorylation (markers of IKKβ and JNK activation, respectively), increased serine phosphorylation of IRS-1 and IRS-2, and impaired insulin signaling in the liver, without affecting IH-induced hepatic PKC- activation. Furthermore, antisense oligonucleotide against PKC- prevented IH-induced phosphorylation of p47^phox (marker of NADPH oxidase activation) and hepatic insulin resistance. Apocynin, an NADPH oxidase inhibitor, prevented IH-induced hepatic and peripheral insulin resistance similar to NAC. These results demonstrate that PKC-, NADPH oxidase and oxidative stress play a causal role in FFA-induced hepatic insulin resistance in vivo and suggest that the pathway of FFA-induced hepatic insulin resistance is FFA -> PKC- -> NADPH oxidase and oxidative stress -> IKKβ/JNK -> impaired hepatic insulin signaling.