Skeletal muscle and kidney-enriched inositol polyphosphate phosphatase (SKIP) has previously been implicated in the regulation of insulin signaling in skeletal muscle. Here, we present the first report of the mechanisms by which SKIP specifically suppresses insulin signaling and the subsequent glucose uptake. Upon insulin stimulation, SKIP is translocated to the membrane ruffles, where it binds to the active form of Pak1, which mediates multiple protein complex formation with phosphatidylinositol 3,4,5-triphosphate (PIP(3)) effectors such as Akt2, PDK1, and Rac1; this leads to inactivation of these proteins. SKIP also promotes the inhibition of Rac1-dependent kinase activity and the scaffolding function of Pak1, which results in the dissociation of Akt2 and PDK1 from Pak1. Thus, specific suppression of insulin signaling is achieved via the spatiotemporal regulation of SKIP through the scaffolding function of Pak1. These interactions are the foundation of the specific and prominent role of SKIP in the regulation of insulin signaling.