Insulin receptor substrate 2 (IRS-2) is the main mediator of insulin signalling in the liver, controlling insulin sensitivity. Sterol regulatory element binding proteins (SREBPs) have been established as transcriptional regulators of lipid synthesis. Here, we show that SREBPs directly repress transcription of IRS-2 and inhibit hepatic insulin signalling. The IRS-2 promoter is activated by forkhead proteins through an insulin response element (IRE). Nuclear SREBPs effectively replace and interfere in the binding of these transactivators, resulting in inhibition of the downstream PI(3)K/Akt pathway, followed by decreased glycogen synthesis. These data suggest a molecular mechanism for the physiological switching from glycogen synthesis to lipogenesis and hepatic insulin resistance that is associated with hepatosteatosis.