To explore the functional effects of hormone-sensitive lipase (HSL) in diacylglycerol (DAG) metabolism, Chinese hamster ovary cells were stably transfected with rat HSL cDNA (wt-HSL), inactive mutant S423A-HSL cDNA (S423A) and pcDNA3 vector alone (Ct). [(14)C]Glucose-incorporation into triglyceride (TG) was 75% lower in the presence or absence of insulin in cells expressing wt-HSL compared to Ct or S423A. [(14)C]Glucose-incorporation into DAG was 33% lower without insulin and 51% lower with insulin in cells expressing wt-HSL compared to Ct or S423A. Insulin stimulated glucose-incorporation into DAG 2.2-fold in S423A and Ct cells, whereas only a 50% increase was observed in cells expressing wt-HSL. Phospholipase C-mediated release of DAG from membrane phospholipids was reduced 70% in cells expressing wt-HSL compared to Ct or S423A. Western blot analysis showed that membrane-bound protein kinase C (PKC)-alpha and -epsilon were decreased 40-50% in cells expressing wt-HSL grown in high glucose with insulin. These data show that HSL potentially hydrolyzes cellular DAG generated either by de novo synthesis from glucose or release from membrane phospholipids by phospholipase C, resulting in a reduction in the translocation of DAG-sensitive PKCs.