Streptozocin-induced diabetes is associated with alterations in insulin signaling in rat skeletal muscle, including increased insulin receptor substrate-1 phosphorylation and phosphotidylinositol 3-kinase activity. In the current study, we determined the effects of streptozocin-induced diabetes and treatment of diabetes by islet cell transplantation on several proximal insulin-activated signaling proteins. Three groups of male Lewis rats (untreated streptozocin-diabetic animals, islet cell-transplanted diabetic rats, and nondiabetic control rats) were studied in the basal state or 30 min after i.p. insulin injection (20 U/rat). Mixed hindlimb skeletal muscle lysates were used to determine the expression and enzymatic activities of the extracellular regulated kinase 2 (ERK2), p90 ribosomal S6 kinase (RSK2), Akt, and p70 S6 kinase (p70S6k). In all three groups of rats, insulin significantly increased ERK2, RSK2, Akt, and p70S6k activities. There was no effect of diabetes on insulin-stimulated ERK2 activity or ERK2 protein levels. RSK2 expression and insulin-stimulated RSK2 activity were significantly elevated in diabetic rats compared with those in the control animals. Insulin-stimulated Akt activity was also significantly greater in the diabetic animals, but there was no change in protein expression. In contrast, there was a decrease in insulin-stimulated p70S6k activity with no change in protein expression in the diabetic rats. Islet transplantation partially (RSK2) or fully (Akt, p70S6k) normalized these diabetes-induced changes in insulin signaling proteins. We conclude that streptozocin diabetes results in the dysregulation of several critical insulin-activated proteins in rat skeletal muscle, but islet cell transplantation is an effective therapy to partially correct these alterations in insulin signaling.