The cleavage of the insulin receptor by β-secretase 1 (BACE1) in the liver increases during diabetes, which contributes to reduce insulin receptor levels and impair insulin signaling. However, the precise signaling events that lead to this increased cleavage are unclear. We showed that BACE1 cleaves the insulin receptor in the early secretory pathway. Indeed, coimmunoprecipitation experiments reveal the interaction of the proforms of the two proteins. Moreover, fragments of insulin receptor are detected in the early secretory pathway and a mutated form of BACE1 that retains its prodomain cleaves an early secretory pathway-resident form of the insulin receptor. We showed that BACE1 proform levels are regulated by proteasome and/or lysosome-dependent degradation systems whose efficiencies are dependent on the O-GlcNacylation process. Our results showed that enhanced O-GlcNacylation reduces the efficiency of intracellular protein degradation systems, leading to the accumulation of the proform of BACE1 in the early secretory pathway where it cleaves the precursor of the insulin receptor. All these dysregulations are found in the livers of diabetic mice. In addition, we performed a screen of molecules according to their ability to increase levels of the insulin receptor at the surface of BACE1-overexpressing cells. This approach identified the aminosterol Claramine, which accelerated intracellular trafficking of the proform of BACE1 and increased autophagy. Both of these effects likely contribute to the reduced amount of the proform of BACE1 in the early secretory pathway, thereby reducing insulin receptor cleavage. These newly described properties of Claramine are consistent with its insulin sensitizing effect.