Low-number transplantation of pancreatic islets into the livers of diabetic rats leads to transformation of the downstream liver acini into clear-cell foci of altered hepatocytes (FAHs). These FAHs correspond to the glycogen-storing (clear-cell) phenotype of hepatocellular preneoplasias and develop into hepatocellular adenomas (HCAs) and hepatocellular carcinomas (HCCs) within 6 to 24 months. In addition, they show metabolic alterations that resemble well-known insulin effects, most likely constituting the result of the local hyperinsulinemia. Thus, we investigated FAHs, HCAs, and HCCs for altered expression of insulin receptor, insulin receptor substrate-1 (IRS-1), Raf-1 and Mek-1. Light and electron microscopic immunohistochemistry revealed a translocation of insulin receptor from the plasma membrane (normal tissue) into the cytoplasm in clear-cell FAHs and an increase in insulin receptor expression in HCAs and HCCs. FAHs also showed an increase in IRS-1 gene expression, investigated by in situ hybridization and quantitative reverse transcription-PCR. IRS-1, Raf-1, and Mek-1 proteins were strongly overexpressed in FAHs and tumors, as compared with the unaltered liver tissue. These overexpressions were closely linked to the clear-cell phenotype of preneoplastic and neoplastic hepatocytes, because basophilic FAHs (later stages) and basophilic tumors showed no overexpressions. In this endocrine model of hepatocarcinogenesis, severe alterations of insulin signaling were induced by the pathological local action of islet hormones in the livers and may substantially contribute to the carcinogenic process.