Insulin signaling controls cell growth and metabolic homeostasis. Dysregulation of this pathway causes metabolic diseases such as diabetes. Insulin signaling pathways have been extensively studied. Upon insulin binding, the insulin receptor (IR) triggers downstream signaling cascades. The active IR is then internalized by clathrin-mediated endocytosis. Despite decades of studies, the mechanism and regulation of clathrin-mediated endocytosis of IR remain incompletely understood. Recent studies have revealed feedback regulation of IR endocytosis through Src homology phosphatase 2 (SHP2) and the mitogen-activated protein kinase (MAPK) pathway. Here we review the molecular mechanism of IR endocytosis and its impact on the pathophysiology of insulin resistance, and discuss the potential of SHP2 as a therapeutic target for type 2 diabetes.