Serine phosphorylation of insulin receptor substrate (IRS) proteins is a potential inhibitory mechanism in insulin signaling. Here we show that IRS-2 is phosphorylated by glycogen synthase kinase-3 (GSK-3). Phosphorylation by GSK-3 requires prior phosphorylation of its substrates, prompting us to identify the 'priming' kinase. It was found that the stress activator anisomycin enhanced GSK-3 ability to phosphorylate IRS-2. Use of a selective c-jun-N-terminal kinase (JNK) inhibitor and cells over-expressing JNK implicated JNK as the priming kinase. This allowed us to narrow down the number of potential GSK-3 phosphorylation sites within IRS-2 to four regions that follow the motif SXXXSP. IRS-2 deletion mutants enabled us to localize the GSK-3 and JNK phosphorylation sites to serines 484 and 488, respectively. Mutation at serine 488 reduced JNK phosphorylation of IRS-2 and mutation of each site separately abolished GSK-3 phosphorylation of IRS-2. Treatment of H4IIE liver cells with anisomycin inhibited insulin-induced tyrosine phosphorylation of IRS-2; inhibition was reversed by pre-treatment with the JNK and GSK-3 inhibitors. Moreover, overexpression of JNK and GSK-3 in H4IIE cells reduced insulin-induced tyrosine phosphorylation of IRS-2 and its association with the p85 regulatory subunit of the PI3 kinase. Finally, both GSK-3 and JNK are abnormally upregulated in the diabetic livers of ob/ob mice. Taken together, our data indicate that IRS-2 is sequentially phosphorylated by JNK and GSK-3 at serines 484/488 and provide evidence for their inhibitory role in hepatic insulin signaling.