It is possible that activation of protein kinase C (PKC) isoforms by free fatty acids (FFA) plays a role in the failure of pancreatic beta-cell mass expansion to compensate for peripheral insulin resistance in the pathogenesis of type-2 diabetes. The effect of lipid moieties on activation of conventional (PKC-alpha and -beta1), novel (PKC-delta) and atypical (PKC-zeta) PKC isoforms was evaluated in an in vitro assay, using biotinylated neurogranin as a substrate. Oleoyl-Coenzyme A (CoA) and palmitoyl-CoA, but not unesterified FFA, significantly increased the activity of all PKC isoforms (P< or =0.05), particularly that for PKC-delta. It was found that FFA (0.4 mM oleate/complexed to 0.5% bovine serum albumin) inhibited IGF-I-induced activation of protein kinase B (PKB) in the pancreatic beta-cell line (INS-1), but this was alleviated in the presence of the general PKC inhibitor (Gö6850; 1 microM). To further investigate whether conventional or novel PKC isoforms adversely affect beta-cell proliferation, the effect of phorbol ester (phorbol 12-myristate 13-acetate; PMA)-mediated activation of these PKC isoforms on glucose/IGF-I-induced INS-1 cell mitogenesis, and insulin receptor substrate (IRS)-mediated signal transduction was investigated. PMA-mediated activation of PKC (100 nM; 4 h) reduced glucose/IGF-I mediated beta-cell mitogenesis (>50%; P< or =0.05), which was reversible by the general PKC inhibitor Gö6850 (1 microM), indicating an effect of PKC and not due to a non-specific PMA toxicity. PMA inhibited IGF-I-induced activation of PKB, correlating with inhibition of IGF-I-induced association of IRS-2 with the p85 regulatory subunit of phosphatidylinositol-3 kinase. However, in contrast, PMA activated the mitogen-activated protein kinases, Erk1/2. Titration inhibition analysis using PKC isoform inhibitors indicated that these PMA-induced effects were via novel PKC isoforms. Thus, FFA/PMA-induced activation of novel PKC isoforms can inhibit glucose/IGF-I-mediated beta-cell mitogenesis, in part by decreasing PKB activation, despite an upregulation of Erk1/2. Thus, activation of novel PKC isoforms by long-chain acyl-CoA may well contribute to decreasing beta-cell mass in the pathogenesis of type-2 diabetes, similar to their inhibition of insulin signal transduction which causes insulin resistance.