During the development of type 2 diabetes mellitus (T2DM), hyperinsulinemia is the earliest symptom. It is believed that long-term high insulin stimulation might facilitate insulin resistance in the liver, but the underlying mechanism remains unknown. Herein, we report that hyperinsulinemia could induce persistent early growth response gene-1 (Egr-1) activation in hepatocytes, which provides negative feedback inhibition of insulin sensitivity by inducing the expression of protein tyrosine phosphatase-1B (PTP1B). Deletion of Egr-1 in the liver remarkably decreases glucose production, thus improving systemic glucose tolerance and insulin sensitivity. Mechanistic analysis indicates that Egr-1 inhibits insulin receptor phosphorylation by directly activating PTP1B transcription in the liver. Our results reveal the molecular mechanism by which hyperinsulinemia accelerates insulin resistance in hepatocytes during the progression of T2DM.