The molecular mechanism whereby tumor necrosis factor-alpha (TNF-alpha) induces insulin resistance in obesity is not well understood. Previously, we have shown that inhibition of TNF-alpha improved hepatic insulin sensitivity in obese Zucker rats without altering the tyrosine phosphorylation of liver insulin receptors (IRs), which indicates that the TNF-alpha and insulin-signaling cascades interact distally to the IR. To assess the effects of TNF-alpha on signaling molecules downstream from the IR, we analyzed the tyrosine phosphorylation patterns of liver homogenate proteins from TNF-alpha-neutralized fa/fa rats and showed that focal adhesion kinase (FAK) was consistently hyperphosphorylated (4.5-fold). Moreover, intravenous insulin increased hepatic FAK phosphorylation in a time-dependent manner in Sprague-Dawley rats, which suggests that TNF-alpha may induce hepatic insulin resistance by preventing FAK phosphorylation in response to insulin treatment. To explore the cellular mechanism whereby TNF-alpha regulates phosphorylation of FAK in the liver, we measured c-Src kinase activity and the abundance of 3 major protein tyrosine phosphatases (PTPs) (PTP-1B, leukocyte antigen-related tyrosine phosphatase [LAR], and src homology 2 domain-containing protein-tyrosine phosphatase [SHPTP-2]) in liver homogenates from obese Zucker rats after TNF-alpha blockade. Hepatic c-Src kinase activity was unaltered, but LAR protein was reduced by 75%. In addition, TNF-alpha blockade reduced hepatic PTP activity toward tyrosine phosphorylated FAK by 70%, and this was accounted for by immunodepletion of LAR. Incubation of HepG2 cells with TNF-alpha increased LAR protein levels in a dose-dependent manner. Additionally, pretreatment with TNF-alpha abolished insulin-stimulated tyrosine phosphorylation of FAK in HepG2 cells but had no effect on IR tyrosine phosphorylation or expression. These data suggest that TNF-alpha promotes LAR expression and thus prevents insulin-mediated tyrosine phosphorylation of FAK. This probably represents the interface between TNF-alpha and insulin signaling in the liver.