Insulin-stimulated hepatic glycogen synthesis is central to glucose homeostasis. Here, we show that PPP1R3G, a regulatory subunit of protein phosphatase 1 (PP1), is directly phosphorylated by AKT. PPP1R3G phosphorylation fluctuates with fasting-refeeding cycle and is required for insulin-stimulated dephosphorylation, i.e., activation of glycogen synthase (GS) in hepatocytes. In this study, we demonstrate that knockdown of PPP1R3G significantly inhibits insulin response. The introduction of wild-type PPP1R3G, and not phosphorylation-defective mutants, increases hepatic glycogen deposition, blood glucose clearance, and insulin sensitivity in vivo. Mechanistically, phosphorylated PPP1R3G displays increased binding for, and promotes dephosphorylation of, phospho-GS. Furthermore, PPP1R3B, another regulatory subunit of PP1, binds to the dephosphorylated GS, thereby relaying insulin stimulation to hepatic glycogen deposition. Importantly, this PP1-mediated signaling cascade is independent of GSK3. Therefore, we reveal a regulatory axis consisting of insulin/AKT/PPP1R3G/PPP1R3B that operates in parallel to the GSK3-dependent pathway, controlling glycogen synthesis and glucose homeostasis in insulin signaling.