A critical component of insulin action is the enzyme phosphoinositide (PI) 3-kinase. The major regulatory subunits of PI 3-kinase, p85α and its splice variants, are encoded by the Pik3r1 gene. Heterozygous disruption of Pik3r1 improves insulin signaling and glucose homeostasis in normal mice and mice made insulin-resistant by heterozygous deletion of the Insulin receptor and/or insulin receptor substrate-1 (IRS1) genes. Reduced expression of p85 modulates the molecular balance between this protein, the p110 catalytic subunit of PI 3-kinase, and the IRS proteins. Thus, despite the decrease in p85α, PI 3-kinase activation is normal, insulin-stimulated Akt activity is increased, and glucose tolerance and insulin sensitivity are improved. Furthermore, Pik3r1 heterozygosity protects mice with genetic insulin resistance from developing diabetes. These data suggest that regulation of p85α levels may provide a novel therapeutic target for the treatment of type 2 diabetes.