BACKGROUND: It is believed that the endotoxin lipopolysaccharide (LPS) is implicated in the metabolic perturbations associated with both sepsis and obesity (metabolic endotoxemia). Here we examined the role of inducible nitric oxide synthase (iNOS) in skeletal muscle insulin resistance using LPS challenge in rats and mice as in vivo models of endotoxemia. METHODOLOGY/PRINCIPAL FINDINGS: Pharmacological (aminoguanidine) and genetic strategies (iNOS⁻/⁻ mice) were used to counter iNOS induction in vivo. In vitro studies using peroxynitrite (ONOO⁻) or inhibitors of the iNOS pathway, 1400 W and EGCG were conducted in L6 myocytes to determine the mechanism by which iNOS mediates LPS-dependent insulin resistance. In vivo, both pharmacological and genetic invalidation of iNOS prevented LPS-induced muscle insulin resistance. Inhibition of iNOS also prevented insulin resistance in myocytes exposed to cytokine/LPS while exposure of myocytes to ONOO⁻ fully reproduced the inhibitory effect of cytokine/LPS on both insulin-stimulated glucose uptake and PI3K activity. Importantly, LPS treatment in vivo and iNOS induction and ONOO⁻ treatment in vitro promoted tyrosine nitration of IRS-1 and reduced insulin-dependent tyrosine phosphorylation. CONCLUSIONS/SIGNIFICANCE: Our work demonstrates that iNOS-mediated tyrosine nitration of IRS-1 is a key mechanism of skeletal muscle insulin resistance in endotoxemia, and presents nitrosative modification of insulin signaling proteins as a novel therapeutic target for combating muscle insulin resistance in inflammatory settings.