The sphingolipid ceramide negatively regulates insulin action by inhibiting Akt/protein kinase B (PKB), a serine/threonine kinase that is a central regulator of glucose uptake and anabolic metabolism. Despite considerable attention, the molecular mechanism accounting for this action of ceramide has remained both elusive and controversial. Herein we utilized deletion constructs encoding two different functional domains of Akt/PKB to identify which region of the enzyme conferred responsiveness to ceramide. Surprisingly the findings obtained with these separate domains reveal that ceramide blocks insulin stimulation of Akt/PKB by two independent mechanisms. First, using the isolated pleckstrin homology domain, we found that ceramide specifically blocks the translocation of Akt/PKB, but not its upstream activator phosphoinositide-dependent kinase-1, to the plasma membrane. Second, using a construct lacking this pleckstrin homology domain, which does not require translocation for activation, we found that ceramide stimulates the dephosphorylation of Akt/PKB by protein phosphatase 2A. Collectively these findings identify at least two independent mechanisms by which excessive ceramide accumulation in peripheral tissues could contribute to the development of insulin resistance. Moreover the results obtained provide a unifying theory to account for the numerous dissenting reports investigating the actions of ceramide toward Akt/PKB.