Routine consumption of alcohol at low doses is associated with decreased risk of acquiring type 2 diabetes; whereas, chronic and excessive alcohol consumption increases the risk. Although there is good epidemiologic evidence for these biphasic effects, careful validation of these effects on insulin signaling has not been reported, nor have biological mechanisms underlying these biphasic effects been proposed. In this study, we provide evidence in rats that low dose alcohol intake (4 g/kg/d) enhances hepatic insulin signaling by suppressing p55 (a PI3K regulatory subunit isoform) at the post-transcriptional level leading to the increased association of the PI3K catalytic subunit (p110) with IRS1 (P < 0.05) and subsequent activation of downstream effectors, such as Akt, GSK3 and nSREBP-1. These results, combined with our previous data (confirmed in the present study) demonstrating that ethanol intake at high doses (13 g/kg/d) disrupts hepatic insulin signaling by inducing TRB3 which prevented activation of downstream effectors (such as Akt, GSK3 and nSREBP-1) provide clear mechanistic validation of the biphasic effects of ethanol on insulin signaling. We also report that ethanol induction of TRB3 can be partially blocked (P < 0.01) by compounds (4-phenyl butyric acid and taurine-ursodeoxycholic acid) known to reduce endoplasmic reticulum (ER) stress. Thus, alcohol exerts biphasic actions on hepatic insulin signaling, such that low doses activate insulin signaling pathways associated with reduced p55 to increase nSREBP-1, while high doses of ethanol elevate TRB3 and suppress insulin signaling to decrease SREBP-1.