All cells adapt to hypertonic stress by regulating their volume following shrinkage, by accumulating organic osmolytes, and by activating mechanisms that protect against and repair hypertonicity-induced damage. In mammals and nematodes, inhibition of signaling from the DAF-2/IGF-1 insulin receptor activates the DAF-16/FOXO transcription factor, resulting in increased lifespan and resistance to some types of stress. We tested the hypothesis that inhibition of insulin signaling in C. elegans also increases hypertonic stress resistance. Genetic inhibition of DAF-2 or its downstream target, the AGE-1 phosphatidylinositol-3-OH kinase, confers striking resistance to a normally lethal hypertonic shock in a DAF-16-dependent manner. However, insulin signaling is not inhibited by or required for adaptation to hypertonic conditions. Microarray studies have identified 263 genes that are transcriptionally upregulated by DAF-16 activation. We identified thirteen DAF-16 upregulated genes by RNAi screening that are required for age-1 hypertonic stress resistance. These genes encode heat shock proteins, proteins of unknown function and trehalose synthesis enzymes. Trehalose levels were elevated ~2-fold in age-1 mutants, but this increase was insufficient to prevent rapid hypertonic shrinkage. However, age-1 animals unable to synthesize trehalose survive poorly under hypertonic conditions. We conclude that increased expression of proteins that protect eukaryotic cells against environmental stress and/or repair stress-induced molecular damage confers hypertonic stress resistance in C. elegans daf-2/age-1 mutants. Elevated levels of solutes such as trehalose may also function in a cytoprotective manner. Our studies provide novel insights into stress resistance in animal cells and a foundation for new studies aimed at defining molecular mechanisms underlying these essential processes.