The Ser/Thr phosphorylation of insulin receptor substrate 1 (IRS) is one key mechanism to stimulate and/or attenuate insulin signal transduction. Using a phospho-specific polyclonal antibody directed against phosphorylated Ser(318) of IRS-1, we found a rapid and transient insulin-stimulated phosphorylation of Ser(318) in human and rodent skeletal muscle cell models and in muscle tissue of insulin-treated mice. None of the investigated insulin resistance-associated factors (e.g. high glucose, tumor necrosis factor-alpha, adrenaline) stimulated the phosphorylation of Ser(318). Studying the function of this phosphorylation, we found that replacing Ser(318) by alanine completely prevented both the attenuation of insulin-stimulated Akt/protein kinase B Ser(473) phosphorylation and glucose uptake after 60 min of insulin stimulation. Unexpectedly, after acute insulin stimulation, we observed that phosphorylation of Ser(318) is not inhibitory but rather enhances insulin signal transduction because introduction of Ala(318) led to a reduction of the insulin-stimulated Akt/protein kinase B phosphorylation. Furthermore, replacing Ser(318) by glutamate, i.e. mimicking phosphorylation, improved glucose uptake after acute insulin stimulation. These data suggest that phosphorylation of Ser(318) is not per se inhibitory but is necessary to trigger the attenuation of the insulin-stimulated signal in skeletal muscle cells. Investigating the molecular mechanism of insulin-stimulated Ser(318) phosphorylation, we found that phosphatidylinositol 3-kinase-mediated activation of atypical protein kinase C-zeta and recruitment of protein kinase C-zeta to IRS-1 was responsible for this phosphorylation. We conclude that Ser(318) phosphorylation of IRS-1 is an early physiological event in insulin-stimulated signal transduction, which attenuates the continuing action of insulin.