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When XBP-1s expression was induced, there was a dramatic reduction in both PERK phosphorylation and JNK activation after tunicamycin treatment (Fig. 3C). Hence, overexpression of XBP-1s rendered wildtype cells refractory to ER stress. Similar experiments performed in XBP-1j/j MEFs revealed an opposite pattern (Fig. 3D). XBP-1j/j MEFs mounted strong ER stress responses even when treated with a low dose of tunicamycin (0.5 6g/ml), which failed to stimulate significant ER stress in wild-type cells (Fig. 3D). Under these conditions, PERK phosphorylation and JNK activation levels in XBP-1j/j MEFs were significantly higher than those seen in wildtype controls (Fig. 3D), which indicates that XBP-1j/j cells are prone to ER stress. Thus, alterations in the levels of cellular XBP-1s protein result in alterations in the ER stress responses. Next, we examined whether these differences in the ER stress responses produced alterations in insulin action as assessed by IRS-1 serine phosphorylation and insulinstimulated IRS-1 tyrosine phosphorylation. Tunicamycin-induced IRS-1 serine phosphorylation was significantly reduced in fibroblasts exogenously expressing XBP-1s, compared with that of control cells (Fig. 3E). On insulin stimulation, the extent of IRS-1 tyrosine phosphorylation was significantly higher in cells overexpressing XBP-1s, compared with controls (Fig. 3F). In contrast, IRS-1 serine phosphorylation was strongly induced in XBP-1j/j MEFs compared with XBP-1þ/þ controls even at low doses of tunicamycin treatment (0.5 6g/ml) (Fig. 3G). After insulin stimulation, the amount of IRS-1 tyrosine phosphorylation was significantly decreased in tunicamycin-treated XBP-1j/j cells compared with tunicamycintreated wild-type controls (Fig. 3H). Insulin Stimulated tyrosine phosphorylation of the insulin receptor was normal in these cells (fig. S4). XBP-1+/-- mice show impaired glucose homeostasis. Complete XBP-1 deficiency results in embryonic lethality (23). To investigate the role of XBP-1 in ER stress, insulin sensitivity, and systemic glucose metabolism in vivo, we studied BALB/cXBP-1þ/j mice with a null mutation in one XBP-1 allele. We chose mice on the BALB/c genetic background, because this strain exhibits strong resistance to obesity induced alterations in systemic glucose metabolism. Based on our results with cellular systems, we hypothesized that XBP-1 deficiency would predispose mice to the development of insulin resistance and type 2 diabetes. We fed XBP-1þ/j mice and their wildtype littermates a HFD at 3 weeks of age. In parallel, control mice of both genotypes were placed on laboratory feed, a regular diet. The total body weights of both genotypes were similar with regular diet and until 12 weeks of age when fed HFD. After this period, the XBP-1þ/janimals fed HFD exhibited a small, but significant, increase in body weight (Fig. 4A). Serum levels of leptin, adiponectin, and triglycerides did not exhibit any statistically significant differences between the genotypes measured after 16 weeks of HFD (fig. S5). Fed HFD, XBP-1þ/j mice developed continuous and progressive hyperinsulinemia evident as early as 4 weeks (Fig. 4B). Insulin levels continued to increase in XBP-1þ/j mice for the duration of the experiment. Blood insulin levels in XBP-1þ/þ mice were significantly lower than those in XBP-1þ/j littermates (Fig. 4B). C-peptide levels were also significantly higher in XBP-1þ/j animals than in wild-type controls (Fig. 4C). Blood glucose levels also began to rise in the XBP-1þ/j mice fed HFD starting at 8 weeks and remained high until the conclusion of the experiment at 20 weeks (Fig. 4D). This pattern was the same in both fasted (Fig. 4D) and fed (16) states. The rise in blood glucose in the face of hyperinsulinemia in the mice fed HFD is a strong indicator of the development of peripheral insulin resistance. To investigate systemic insulin sensitivity, we performed glucose tolerance tests (GTT) and insulin tolerance tests (ITT) in XBP-1þ/j mice and XBP-1þ/þ controls. Exposure to HFD resulted in significant glucose intolerance in XBP-1þ/j mice. After 7 weeks of HFD, XBP-1þ/j mice showed significantly higher glucose levels on glucose challenge than XBP-1þ/þ mice (Fig. 4E). This glucose intolerance continued to be evident in XBP-1þ/j mice compared with wild-type mice after 16 weeks of HFD (Fig. 4F). During ITT, the hypoglycemic response to insulin was also significantly lower in XBP-1þ/j mice compared with XBP-1þ/þ littermates at 8 weeks of HFD (Fig. 4G), and this reduced responsiveness continued to be evident after 17 weeks of HFD (Fig. 4H). Examination of islets morphology and function did not reveal significant differences between genotypes (fig. S6). Hence, loss of an XBP-1 allele predisposes mice to diet-induced peripheral insulin resistance and type 2 diabetes. Increased ER stress and impaired insulin signaling in XBP-1+/-- mice. Our experiments with cultured cells demonstrated an increase in ER stress and a decrease in insulin signaling capacity in XBP-1–deficient cells, as well as reversal of these phenotypes on expression of high levels of XBP-1s. If this mechanism is the basis of the insulin resistance seen in XBP1þ/j mice, these animals should exhibit high levels of ER stress coupled with impaired insulin receptor signaling. To test this, we first examined PERK phosphorylation and JNK activity in the livers of obese XBP-1þ/j and wild-type mice. These experiments revealed an increase in PERK levels and seemingly an increase in liver PERK phosphorylation in obese XBP-1þ/j mice compared with wild-type controls fed HFD (Fig. 5A). There was a significant increase in JNK activity in XBP-1þ/j mice compared with wild-type controls (Fig. 5B). Consistent with these results, Ser307 phosphorylation of IRS-1 was also increased in XBP-1þ/j mice compared with wild-type controls fed HFD (Fig. 5C). Finally, we studied in vivo insulin-stimulated insulin receptor–signaling capacity in these mice. There was no detectable difference in any of the insulin receptor–signaling components in liver and adipose tissues between genotypes taking regular diet (fig. S7). However, after exposure to HFD, major components of insulin receptor signaling in the liver, including insulin-stimulated insulin receptor, IRS-1, and IRS-2 tyrosine- and Akt serine-phosphorylation, were all decreased in XBP-1þ/j mice compared with wild-type controls (Fig. 5, D to G). A similar suppression of insulin receptor signaling was also evident in the adipose tissues of XBP-1þ/j mice compared with XBP-1þ/þ mice fed HFD (fig. S8). The suppression of IR tyrosine phosphorylation in XBP-1þ/j mice differs from the observations made in XBP-1j/j cells, where ER stress inhibited insulin action after the receptor signal in the pathway. It is likely that this difference reflects the effects of chronic hyperinsulinemia in vivo on insulin receptors. Hence, our data demonstrate the link between ER stress and insulin action in vivo but are not conclusive in determining the exact locus in insulin receptor signaling pathway that is targeted through this mechanism. Discussion. In this study, we identify ER stress as a molecular link between obesity, the deterioration of insulin action, and the development of type 2 diabetes. Induction of ER stress or reduction in the compensatory capacity through down-regulation of XBP-1 leads to suppression of insulin receptor signaling in intact cells via IRE-1"– dependent activation of JNK. Experiments with mouse models also yielded data consistent with the link between ER stress and systemic insulin action. Deletion of an XBP-1 allele in mice leads to enhanced ER stress, hyperactivation of JNK, reduced insulin receptor signaling, systemic insulin resistance, and type 2 diabetes. Our findings point to a fundamental mechanism underlying the molecular sensing of obesity-induced metabolic stress by the ER and inhibition of insulin action that ultimately leads to insulin resistance and type 2 diabetes. We therefore postulate that ER stress underlies the emergence of the stress and inflammatory responses in obesity and the integrated deterioration of systemic glucose homeostasis. Although our results in this study predominantly point to a role for ER stress in peripheral insulin resistance, earlier studies have linked ER stress with islet function and survival. For example, PERKj/j mice exhibit a phenotype resembling type 1 diabetes resulting from pancreatic islet destruction soon after birth (24). PERK mutations also cause a rare inherited form of type 1 diabetes in humans (25). Loss of eIF2" phosphorylation by targeted mutation of serine 51 residue of eIF2" to alanine also leads to alterations in pancreatic beta cell function, in addition to its impact on liver gluconeogenesis (11, 26). Therefore, we propose that the effect of chronic ER stress on glucose homeostasis in obesity could represent a central and integrating mechanism underlying both peripheral insulin resistance and impaired insulin secretion. The critical role of ER stress responses in insulin action may represent a mechanism conserved by evolution, whereby stress signals are integrated with metabolic regulatory pathways through the ER. This integration could have been advantageous, because proper regulation of energy fluxes and the suppression of major anabolic pathways might have been favorable during acute stress, pathogen invasion, and immune responses. Hence, the trait would propagate through natural selection. However, in the presence of chronic ER stress, such as we see in obesity, the effect of ER stress on metabolic regulation would lead to the development of insulin resistance and, eventually, type 2 diabetes. In terms of therapeutics, our findings suggest that interventions that regulate the ER stress response offer new opportunities for preventing and treating type 2 diabetes.