The cDNAs encoding the normal human insulin receptor (HIRc) and a receptor that had lysine residue 1018 replaced by alanine (A/K1018) were used to transfect Rat 1 fibroblasts. Lysine 1018 is a critical residue in the ATP binding site of the tyrosine kinase domain in the receptor beta-subunit. Untransfected Rat 1 cells express 1700 endogenous insulin receptors. Expressed HIRc receptors had levels of insulin-stimulable autophosphorylation in vitro comparable to normal receptors, whereas A/K1018 receptors had less than 1% of that activity. Stimulation by insulin of HIRc receptors in situ in intact cells led to phosphorylation of beta-subunit tyrosine residues and activation of tyrosine kinase activity that could be preserved and assayed in vitro after receptor purification. In contrast, A/K1018 receptors showed no such activation, either of autophosphorylation or of kinase activity toward histone. Cells expressing HIRc receptors display enhanced sensitivity to insulin of 2-deoxyglucose transport and glycogen synthase activity. This increased sensitivity was proportional to insulin receptor number at low but not at high levels of receptor expression. A/K1018 receptors were unable to mediate these biologic effects and actually inhibited insulin's ability to stimulate glucose transport and glycogen synthase through the endogenous Rat 1 receptors. Expressed HIRc receptors mediated insulin internalization and degradation, whereas A/K1018 receptors mediated little, if any. Endocytotic uptake of the expressed A/K1018 insulin receptors was also markedly depressed compared to normal receptors. Unlike HIRc receptors, A/K1018 receptors also fail to undergo down-regulation after long (24 h) exposures to high (170 nM) concentrations of insulin. We conclude the following. 1) Normal human insulin receptors expressed in Rat 1 fibroblasts display active tyrosine-specific kinase, normal intracellular itinerary after endocytosis, and normal coupling to insulin's biologic effects. 2) A receptor mutated to alter the ATP binding site in the tyrosine kinase domain had little if any tyrosine kinase activity. 3) This loss of kinase activity was accompanied by a nearly complete lack of both endocytosis and biologic activity.