The newly identified insulin receptor (IR) substrate, Gab1 [growth factor receptor bound 2 (Grb2)-associated binder-1] is rapidly phosphorylated on several tyrosine residues by the activated IR. Phosphorylated Gab1 acts as a docking protein for Src homology-2 (SH2) domain-containing proteins. These include the regulatory subunit p85 of phosphatidylinositol 3-kinase and phosphotyrosine phosphatase, SHP-2. In this report, using a modified version of the yeast two-hybrid system, we localized which Gab1 phospho-tyrosine residues are required for its interaction with phosphatidylinositol 3-kinase and with SHP-2. Our results demonstrate that to interact with p85 or SHP-2 SH2 domains, Gab1 must be tyrosine phosphorylated by IR. Further, we found that Gab1 tyrosine 472 is the major site for association with p85, while tyrosines 447 and 589 are participating in this process. Concerning Gab1/SHP-2 interaction, only mutation of tyrosine 627 prevents binding of Gab1 to SHP-2 SH2 domains, suggesting the occurrence of a monovalent binding event. Finally, we examined the role of Gab1 PH (Pleckstrin homology) domain in Gab1/IR interaction and in Gab1 tyrosine phosphorylation by IR. Using the modified two-hybrid system and in vitro experiments, we found that the Gab1 PH domain is not important for IR/ Gab1 interaction and for Gab1 tyrosine phosphorylation. In contrast, in intact mammalian cells, Gab1 PH domain appears to be crucial for its tyrosine phosphorylation and association with SHP-2 after insulin stimulation.