Defects in insulin secretion, resulting from loss of function or destruction of pancreatic beta-cells, trigger diabetes. Interleukin (IL)-1beta is a proinflammatory cytokine that is involved in type 1 and type 2 diabetes development and impairs beta-cell survival and function. Because effective insulin signaling is required for the optimal beta-cell function, we assessed the effect of IL-1beta on the insulin pathway in a rat pancreatic beta-cell line. We show that IL-1beta decreases insulin-induced tyrosine phosphorylation of the insulin receptor (IR) and insulin receptor substrate (IRS) proteins as well as phosphatidylinositol 3-kinase (PI3K) activation, and that this action is not due to the IL-1beta-dependent nitric oxide (NO) production in RINm5F cells. We next analyzed if suppressor of cytokine signaling (SOCS)-3, which can be induced by multiple cytokines and which we identified as an insulin action inhibitor, was implicated in the IL-1beta inhibitory effect on insulin signaling in these cells. We show that IL-1beta increases SOCS-3 expression and induces SOCS-3/IR complex formation in RINm5F cells. Moreover, we find that ectopically expressed SOCS-3 associates with the IR and reduces insulin-dependent IR autophosphorylation and IRS/PI3K pathway in a way comparable to IL-1beta treatment in RINm5F cells. We propose that IL-1beta decreases insulin action in beta-cells through the induction of SOCS-3 expression, and that this effect potentially alters insulin-induced beta-cell survival.