Advanced glycation end products (AGEs) could be implicated in insulin resistance. However, the molecular mechanisms underlying this are not fully understood. Since pigment epithelium-derived factor (PEDF) blocks the AGE-signaling pathways, we examined here whether and how PEDF improves insulin resistance in AGE-exposed hepatoma cells, Hep3B cells. Proteins were extracted from Hep3B cells, immunoprecipitated with or without insulin receptor substrate-1 (IRS-1) antibodies, and subjected to Western blot analysis. Glycogen synthesis was measured using [ (14)C]-d-glucose. AGE induced Rac-1 activation and increased phosphorylation of IRS-1 at serine-307 residues, JNK, c-JUN, and IkappaB kinase in association with decreased IkappaB levels in Hep3B cells. PEDF or overexpression of dominant negative Rac-1 blocked these effects of AGE on Hep3B cells. Further, AGEs decreased tyrosine phosphorylation of IRS-1, and subsequently reduced the association of p85 subunit of phosphatidylinositol 3-kinase with IRS-1 and glycogen synthesis in insulin-exposed Hep3B cells, all of which were inhibited by PEDF. Our present study suggests that PEDF could improve the AGE-elicited insulin resistance in Hep3B cells by inhibiting JNK- and IkappaB kinase-dependent serine phosphorylation of IRS-1 via suppression of Rac-1 activation. PEDF may play a protective role against hepatic insulin resistance in diabetes.