The contribution of the insulin receptor beta-subunit acidic domain, amino acids 1262-1291, to receptor function was analyzed. A mutant insulin receptor complementary DNA lacking this domain was created. Rat-1 fibroblasts were stably transfected with plasmids containing the mutant insulin receptor complementary DNA and clonal cell lines derived (hIR1262). Compared with cells overexpressing the wild type insulin receptor, metabolic signaling was enhanced in hIR1262 cells whereas the mitogenic response to insulin was unchanged. hIR1262 had normal kinase activity and insulin-stimulated receptor internalization in spite of substantially reduced autophosphorylation (70% decreased in vitro). Additionally, polylysine, a polycation postulated to interact with the insulin receptor beta-subunit acidic domain, increased autophosphorylation and facilitated insulin-induced phosphorylation of calmodulin in the wild type as well as the hIR1262 receptors. We conclude: 1) The acidic domain is not the site of interaction between the insulin receptor and polycations. 2) Removal of the acidic domain leads to enhanced metabolic signaling but 3) unchanged mitogenic activity. 4) The defect in autophosphorylation is not correlated with a defect in kinase activity. Thus, the observed changes in biological signaling indicate that specific pathways diverge at the level of the receptor itself and that neither kinase activity or biological activity necessarily correlates directly with diminished autophosphorylation when the tyrosine kinase domain remains intact.