A new 2.0-litre diesel ecoFLEX engine has been added to the range, cutting CO2 emissions to 115g/km and moving the car into Band A of UK Vehicle Excise Duty.
However, estate versions will be in Band B, meaning VED is free for the first year and £30 in subsequent years.
The engine is available in 130bhp and 160bhp outputs, but only the former will deliver the low CO2 emissions.
However, the more powerful engine is capable of 137mph and can reach 60mph in 8.9 seconds, one and a half seconds faster than the less powerful unit.
The improved environmental performance for both engines is boosted by the introduction of Start-Stop technology, which turns off the engine when the car is stationary in busy traffic and instantly turns it back on when the car is ready to move away.
Other improvements include aerodynamic tweaks to the underbelly of the car and low rolling resistance tyres.
A new 1.4-litre Turbo engine has also been added to the Insignia range for those looking for a petrol powertrain.
The 1.4-litre engine delivers CO2 emissions of 129g/km and 51.4mpg, making it one of the most efficient mid-size cars in the UK.
The Vauxhall Insignia is already one of the most popular models in the UK, regularly finishing in the top ten best selling models and outselling key rival the Ford Mondeo in 2010 and in the first four months of 2011.
Prices for the new Vauxhall Insignia start from £20,345 for the Insignia ES 2.0 CDTi (130PS) ecoFLEX Hatchback.
The 1.4 Turbo is priced from £18,680 for the ES Hatchback up to £27,110 for the SRi Nav Vx Line Red Sports Tourer.