We have shown previously that mice with a targeted disruption in the stearoyl-CoA desaturase 1 gene (SCD1^-/-) have increased insulin sensitivity compared with control mice. Here we show that the SCD1^-/- mice have increased insulin signaling in muscle. The basal tyrosine phosphorylation of the insulin receptor and insulin receptor substrates 1 and 2 are elevated. The tyrosine phosphorylation of insulin-like growth factor-1 receptor was similar between SCD1^+/+ and SCD1^-/- mice. The association of insulin receptor substrates 1 and 2 with αp85 subunit of phosphatidylinositol 3-kinase as well as the phosphorylation of Akt-Ser-473 and Akt-Thr-308 are also elevated in the SCD1^-/- mice. Interestingly, the mRNA levels, protein mass, and activity of the protein-tyrosine phosphatase-1B implicated in the attenuation of the insulin signal are reduced in the SCD1^-/- mice, whereas the levels of the leukocyte antigen-related protein phosphatase are similar between two groups of mice. The content of glucose transporter 4 in the plasma membrane and basal as well as insulin-mediated glucose uptake are increased in the SCD1^-/- mice. In addition, the muscle glycogen content and the activities of glycogen synthase and phosphorylase are increased in the SCD1^-/- mice. We hypothesize that loss of SCD1 function induces increased insulin signaling at least in part by a reduction in the expression of protein-tyrosine phosphatase 1B. SCD1 could be a therapeutic target in the treatment of diabetes.