MicroRNAs comprise a class of small (∼22 nucleotide) non-coding RNA species and they bind to their complementary sequence on the 3′UTR of target genes and cause translational repression. In the present study, we report that miR-29a levels are significantly elevated in the diabetic db/db mice liver. Further, we report the effects of such elevation on insulin action in HepG2 cells. Overexpression of miR-29a narrowed down insulin mediated Akt phosphorylation without altering the total Akt levels presumably due to another upstream mediator being directly targeted by miR-29a. This hunt led us to the discovery that the p85α subunit of PI3K (phosphoionositide-3-kinase), the upstream molecule in the insulin signaling cascade harbors the miR-29a binding site on its 3′UTR and a marked inhibition of PI3Kp85α was observed by this microRNA. This was consequently accompanied by attenuation of insulin inhibition of PEPCK gene expression. All these events could be significantly prevented in the presence of the miR-29a inhibitor. Our results, for the first time, show the effect of miR-29a in counteracting insulin action on PEPCK gene expression by primarily targeting PI3K and abrogating downstream insulin signaling in HepG2 cells.