Soy protein and isoflavonoids in soybeans exhibit the improvement of insulin resistance. Our previous IN VITRO study showed that Chungkookjang (CKJ), fermented unsalted soybeans, had better antidiabetic actions than cooked unfermented soybeans (CSB) by increasing isoflavones aglycones and small peptides. We investigated whether 40% fat diets with different protein sources such as CSB, CKJ, and casein modulated peripheral insulin resistance in 90% pancreatectomized (Px) diabetic rats. The Px rats weighing 209+/-14 g were freely provided casein, CSB, or CKJ diets for 8 weeks. Both CKJ and CSB increased whole body glucose disposal rates and glucose uptake into skeletal muscles of Px rats as much as rosiglitazone plus casein treated rats during euglycemic hyperinsulinemic clamp. In addition, CKJ and CSB decreased hepatic glucose output at hyperinsulinemic clamped states, compared to the Casein group. The reduction of hepatic glucose output was greater in CKJ than CSB. This reduction was associated with enhanced tyrosine phosphorylation of IRS2 and serine (473) phosphporylation of Akt, indicating improved hepatic insulin signaling. This improved signaling led to decreased phosphoenolpyruvate carboxykinase expression to reduce hepatic glucose output. In conclusion, fermented soybeans mainly with BACILLUS SUBTILIS improved hepatic insulin sensitivity better than unfermented soybeans by enhancing hepatic insulin signaling cascade in diabetic rats.