Polyphosphoinositides are thought to be mediators of cellular signaling pathways as well as regulators of cytoskeletal elements and membrane trafficking events. It has recently been demonstrated that a class of phosphatidylinositol (PI) 3,4,5-P3 5'-phosphatases contains SH2 domains and proline-rich regions, which are present in many signaling proteins. We report here that insulin stimulation of Chinese hamster ovary cells (CHO-T) expressing human insulin receptors causes an 8-10-fold increase in PI 3,4,5-P3 5'-phosphatase activity in anti-phosphotyrosine immunoprecipitates of the cell lysates. This insulin-sensitive polyphosphoinositide 5'-phosphatase did not catalyze dephosphorylation of PI 4,5-P2. No change in 5'-phosphatase activity was detected in insulin receptor or IRS-1 immune complexes in response to insulin. However, insulin treatment of CHO-T cells markedly increased the PI 3,4,5-P3 5'-phosphatase activity associated with Shc and Grb2. The insulin-regulated polyphosphoinositide 5'-phosphatase was not immunoreactive with antibody raised against the recently cloned SHIP 5'-phosphatase reported to associate with Shc and Grb2 in B lymphocytes. These data demonstrate that insulin causes formation of complexes containing a PI 3,4,5-P3 5'-phosphatase, and Shc or Grb2, or both, suggesting an important role of this enzyme in insulin signaling.