Plasma cell membrane glycoprotein-1 or ectonucleotide pyrophosphatase/phosphodiesterase (PC-1/ENPP1) has been shown to inhibit insulin signaling, and its genetic polymorphism or increased expression is associated with type 2 diabetes in humans. Therefore, PC-1 inhibition represents a potential strategy in treating diabetes. Since patients with phosphodiesterase/pyrophosphatase deficient PC-1 manifest abnormal calcification, enhancing insulin signaling by inhibiting PC-1 for the treatment of diabetes will be feasible only if PC-1 phosphodiesterase/pyrophosphatase activity needs not be significantly diminished. However, whether inhibition of insulin receptor signaling by PC-1 is dependent upon its phosphodiesterase/pyrophosphatase activity remains controversial. In this study, the extracellular domain of the human PC-1 in its native form or with a T256A or T256S mutation was overexpressed and purified. Enzymatic assays showed that both mutants have less than 10% of the activity of the wild-type protein. In HEK293 cells stably expressing recombinant insulin receptor or insulin-like growth factor 1 (IGF1) receptor, transient expression of wild-type full length PC-1 (PC-1.FL.WT) but not the T256A or T256S mutants inhibits insulin signaling without affecting IGF1 signaling. Western blot and FACS analysis showed that the wild-type and mutant full length PC-1 proteins are expressed at similar levels in the cells, and were localized to the similar levels on the cell surface. Overexpression of PC-1.FL.WT did not affect insulin receptor mRNA level, total protein and cell surface levels. Together, these results suggest that the inhibition of insulin signaling by PC-1 is somewhat specific and is dependent upon the enzymatic activity of the phosphodiesterase/pyrophosphatase.