Recent mining of the human and mouse genomes, use of yeast genetics, and detailed analyses of several biochemical pathways, have resulted in the identification of many new roles for ubiquitin-proteasome mediated degradation of proteins. In the context of last year's award of Noble Prize (Chemistry) work, the ubiquitin and ubiquitin-like modifications are increasingly recognized as key regulatory events in health and disease. Although the ATP-dependent ubiquitin-proteasome system has evolved as premier cellular proteolytic machinery, dysregulation of this system by several different mechanisms leads to inappropriate degradation of specific proteins and pathological consequences. While aberrations in the ubiquitin-proteasome pathway have been implicated in certain malignancies and neurodegenerative disorders, recent studies indicate a role for this system in the pathogenesis of diabetes and its complications. Inappropriate degradation of insulin signaling molecules such as insulin receptor substrates (IRS-1 and IRS-2) has been demonstrated in experimental diabetes, mediated in part through the up-regulation of suppressors of cytokine signaling (SOCS). It appears that altered ubiquitin-proteasome system might be one of the molecular mechanisms of insulin resistance in many pathological situations. Drugs that modulate the SOCS action and/or proteasomal degradation of proteins could become novel agents for the treatment of insulin resistance and Type 2 diabetes.