A dynamic cycle of O-linked N-acetylglucosamine (O-GlcNAc) addition and removal acts on nuclear pore proteins, transcription factors, and kinases to modulate cellular signaling cascades. Two highly conserved enzymes (O-GlcNAc transferase and O-GlcNAcase) catalyze the final steps in this nutrient-driven "hexosamine-signaling pathway." A single nucleotide polymorphism in the human O-GlcNAcase gene is linked to type 2 diabetes. Here, we show that Caenorhabditis elegans
oga-1 encodes an active O-GlcNAcase. We also describe a knockout allele,
oga-1(
ok1207), that is viable and fertile yet accumulates O-GlcNAc on nuclear pores and other cellular proteins. Interfering with O-GlcNAc cycling with either
oga-1(
ok1207) or the O-GlcNAc transferase-null
ogt-1(
ok430) altered Ser- and Thr-phosphoprotein profiles and increased glycogen synthase kinase 3beta (GSK-3beta) levels. Both the
oga-1(
ok1207) and
ogt-1(
ok430) strains showed elevated stores of glycogen and trehalose, and decreased lipid storage. These striking metabolic changes prompted us to examine the insulin-like signaling pathway controlling nutrient storage, longevity, and dauer formation in the C. elegans O-GlcNAc cycling mutants. Indeed, we found that the
oga-1(
ok1207) knockout augmented dauer formation induced by a temperature sensitive insulin-like receptor (
daf-2) mutant under conditions in which the
ogt-1(
ok430)-null diminished dauer formation. Our findings suggest that the enzymes of O-GlcNAc cycling "fine-tune" insulin-like signaling in response to nutrient flux. The knockout of O-GlcNAcase (
oga-1) in C. elegans mimics many of the metabolic and signaling changes associated with human insulin resistance and provides a genetically amenable model of non-insulin-dependent diabetes.