Insulin treatment of fibroblasts overexpressing the insulin receptor causes a rapid accumulation of the GTP-bound form of p21ras. We have studied the involvement of protein kinase C (PKC) in, and the effect of phenylarsine oxide (PAO), a putative inhibitor of tyrosine phosphatase activity on, this process. Activation of p21ras was not observed when the cells were stimulated with the phorbol ester 12-O-tetradecanoyl-phorbol-13-acetate (TPA) and pretreatment with TPA for 16 h, sufficient to down-regulate PKC activity, did not abolish p21ras activation by insulin. These results show that PKC is not involved in the insulin-induced activation of p21ras. Pretreatment of the cells with PAO for 5 min completely blocked insulin-induced p21ras activation. Addition of 2,3-dimercaptopropanol prevented this inhibition by PAO. Also, addition of PAO after insulin stimulation could reverse the activation of p21ras. Since PAO did not affect overall phosphorylation of the insulin receptor beta-chain, we conclude that a PAO-sensitive protein is involved in the induction of p21ras activation by insulin.