Glucose flux through the hexosamine biosynthetic pathway leads to the post-translational modification of cytoplasmic and nuclear proteins by O-linked beta-N-acetylglucosamine (O-GlcNAc). This tandem system serves as a nutrient sensor to couple systemic metabolic status to cellular regulation of signal transduction, transcription, and protein degradation. Here we show that O-GlcNAc transferase (OGT) harbours a previously unrecognized type of phosphoinositide-binding domain. After induction with insulin, phosphatidylinositol 3,4,5-trisphosphate recruits OGT from the nucleus to the plasma membrane, where the enzyme catalyses dynamic modification of the insulin signalling pathway by O-GlcNAc. This results in the alteration in phosphorylation of key signalling molecules and the attenuation of insulin signal transduction. Hepatic overexpression of OGT impairs the expression of insulin-responsive genes and causes insulin resistance and dyslipidaemia. These findings identify a molecular mechanism by which nutritional cues regulate insulin signalling through O-GlcNAc, and underscore the contribution of this modification to the aetiology of insulin resistance and type 2 diabetes.