Insulin action in the liver is critical for glucose homeostasis through regulation of glycogen synthesis and glucose output. Arrestin domain-containing 3 () is a member of the α-arrestin family previously linked to human obesity. Here, we show that is differentially regulated by insulin in vivo in mice undergoing euglycemic-hyperinsulinemic clamps, being highly up-regulated in liver and down-regulated in muscle and fat. Mice with liver-specific knockout (KO) of the insulin receptor (IR) have a 50% reduction in messenger RNA, while, conversely, mice with liver-specific KO of (L- KO) have increased IR protein in plasma membrane. This leads to increased hepatic insulin sensitivity with increased phosphorylation of FOXO1, reduced expression of PEPCK, and increased glucokinase expression resulting in reduced hepatic glucose production and increased hepatic glycogen accumulation. These effects are due to interaction of ARRDC3 with IR resulting in phosphorylation of ARRDC3 on a conserved tyrosine (Y382) in the carboxyl-terminal domain. Thus, is an insulin target gene, and ARRDC3 protein directly interacts with IR to serve as a feedback regulator of insulin action in control of liver metabolism.