Many drugs are associated with the development of glucose intolerance or deterioration in glycemic control in patients with pre-existing diabetes. We have evaluated the cross-talk between signaling pathways activated by acetaminophen (APAP) and insulin signaling in hepatocytes with or without expression of the protein-tyrosine phosphatase 1B (PTP1B) and in wild-type and PTP1B-deficient mice chronically treated with APAP. Human primary hepatocytes, Huh7 hepatoma cells with silenced PTP1B, mouse hepatocytes from wild-type and PTP1B-deficient mice, and a mouse model of chronic APAP treatment were used to examine the mechanisms involving PTP1B in the effects of APAP on glucose homeostasis and hepatic insulin signaling. In APAP-treated human hepatocytes at concentrations that did not induce death, phosphorylation of JNK and PTP1B expression and enzymatic activity were increased. APAP pretreatment inhibited activation of the early steps of insulin signaling and decreased Akt phosphorylation. The effects of APAP in insulin signaling were prevented by suramin, a PTP1B inhibitor, or rosiglitazone that decreased PTP1B levels. Likewise, PTP1B deficiency in human or mouse hepatocytes protected against APAP-mediated impairment in insulin signaling. These signaling pathways were modulated in mice with chronic APAP treatment, resulting in protection against APAP-mediated hepatic insulin resistance and alterations in islet alpha/beta cell ratio in PTP1B(-/-) mice. Our results demonstrate negative cross-talk between signaling pathways triggered by APAP and insulin signaling in hepatocytes, which is in part mediated by PTP1B. Moreover, our in vivo data suggest that chronic use of APAP may be associated with insulin resistance in the liver.