A mutant human insulin receptor that lacked the 82 amino acids of the COOH terminus of the beta-subunit (del82) was studied. Both the wild type insulin receptor (HIR) and the mutant receptor were expressed in Chinese hamster ovary (CHO) cells by stable transfection. Autophosphorylation and tyrosine kinase activities toward exogenous substrates of solubilized and partially purified del82 were severely impaired. When CHO cells transfected with del82 (CHO-del82) were stimulated with insulin, autophosphorylation was decreased to a great extent compared with cells expressing HIR (CHO-HIR). Nevertheless, tyrosine phosphorylation of an endogenous substrate, pp185, and insulin receptor substrate-1 (IRS-1) in CHO-del82 was comparable with that in CHO-HIR. Insulin-stimulated activation of phosphatidylinositol 3-kinase activity in CHO-del82 was also equivalent to that in CHO-HIR. Moreover, CHO-del82 exhibited the same insulin sensitivity as CHO-HIR with respect to 2-deoxyglucose uptake and thymidine incorporation into DNA. Insulin-induced internalization in CHO-del82 was decreased by 46% as compared with that in CHO-HIR. These data suggest that: 1) the COOH-terminal domain of the insulin receptor may play an inhibitory role in the phosphorylation of pp185 and IRS-1; and 2) phosphorylation of substrates such as pp185 and IRS-1, rather than autophosphorylation of the receptor per se, correlates better with certain biological effects that were mediated by insulin, suggesting that phosphorylation of the substrates might be sufficient for transducing signals downstream.