Plasma membrane-associated sialidase is a key enzyme for ganglioside hydrolysis, thereby playing crucial roles in regulation of cell surface functions. Here we demonstrate that mice overexpressing the human ortholog (NEU3) develop diabetic phenotype by 18 -22 weeks associated with hyperinsulinemia, islet hyperplasia, and increased -cell mass. As compared with the wild type, insulin-stimulated phosphorylation of the insulin receptor (IR) and insulin receptor substrate I was significantly reduced, and activities of phosphatidylinositol 3-kinase and glycogen synthase were low in transgenic muscle. IR phosphorylation was already attenuated in the younger mice before manifestation of hyperglycemia. Transient transfection of NEU3 into 3T3-L1 adipocytes and L6 myocytes caused a significant decrease in IR signaling. In response to insulin, NEU3 was found to undergo tyrosine phosphorylation and subsequent association with the Grb2 protein, thus being activated and causing negative regulation of insulin signaling. In fact, accumulation of GM1 and GM2, the possible sialidase products in transgenic tissues, caused inhibition of IR phosphorylation in vitro, and blocking of association with Grb2 resulted in reversion of impaired insulin signaling in L6 cells. The data indicate that NEU3 indeed participates in the control of insulin signaling, probably via modulation of gangliosides and interaction with Grb2, and that the mice can serve as a valuable model for human insulin-resistant diabetes.Gangliosides are a family of sialic acid-containing glycosphingolipids present in the cell surface membranes. Several lines of evidence suggest their important functional roles in regulating a wide range of biological processes including cell growth, cell differentiation, and transmembrane signaling (1-3). Most of the observations on ganglioside function, however, have been performed so far by using bacterial sialidases and exogenous gangliosides to mimic in vivo expression. To obtain further insights into their physiological significance and regulation mechanism, it is necessary to focus on endogenous sialidases responsible for ganglioside hydrolysis inside the cells. Three types of mammalian sialidase have been cloned and established to have low identity with each other in their primary structure. They differ in enzymatic properties and subcellular localization, being mainly found in lysosomes (Neu1), cytosol (Neu2), and plasma membranes (Neu3). Other than the contribution of lysosomal sialidase to glycoconjugate catabolism in lysosomes, their cellular roles are not well understood. The fact that plasma membrane sialidase is unique in specifically hydrolyzing gangliosides (4 -10) and in its subcellular localization in plasma membranes, where levels of other glycosidases are very low, suggests participation in cell surface events through modulation of gangliosides. To obtain evidence of this, we previously cloned sialidase cDNAs of mammalian origin (8, 9, 11, 12), and we have recently investigated effects of overexpression in transgenic...