Cellular homeostasis requires regulation of protein turnover. Protein degradation is an essential component of this process and is inhibited by insulin. The importance of cytosolic proteolysis in overall cellular protein degradation is increasingly apparent and an insulin effect on this system has been suggested but not proven. The present study shows that a membrane permeable substrate of the proteasome is degraded in HepG2 cells and that insulin inhibits its degradation both by isolated proteasomes and by intact cells. Inhibitors of the proteasome suppress degradation, and in the presence of these inhibitors insulin has no further effect. This is the first demonstration that insulin inhibition of cellular protein degradation is due to an effect on proteasomes.