Three recent advances pertinent to the mechanism of insulin action include (i) the discovery that the insulin receptor is an insulin-dependent protein tyrosine kinase, functionally related to certain growth factor receptors and oncogene-encoded proteins, (ii) the molecular cloning of the insulin proreceptor complementary DNA, and (iii) evidence that the protein tyrosine kinase activity of the receptor is essential for insulin action. Efforts are now focusing on the physiological substrates for the receptor kinase. Experience to date suggests that they will be rare proteins whose phosphorylation in intact cells may be transient. The advantages of attempting to dissect the initial biochemical pathway of insulin action include the wealth of information about the metabolic consequences of insulin action and the potential for genetic analysis in Drosophila and in man.