We have used insulin analogs having leucine or alanine substitutions at positions B24 and B25 to examine the structural basis for insulin binding and insulin metabolism by isolated rat hepatocytes. Apparent receptor binding affinities for the analogs were in the order insulin greater than [LeuB24]insulin greater than [LeuB25]insulin = [AlaB24]insulin. Incubation of the corresponding 125I-labeled peptides with hepatocytes followed by analysis of the cell-associated products showed that [125I]iodoinsulin and [125I]iodo-[LeuB25]insulin were processed to a peptide intermediate which appeared as an ascending shoulder on the peak of cell-associated hormone during gel filtration; similar incubations using [125I]iodo-[LeuB24]insulin or [125I]iodo-[AlaB24]insulin failed to yield detectable amounts of the intermediate. In addition, assessment of the structures of insulin and the three insulin analogs by tyrosine radioiodination showed that [LeuB24]insulin and [AlaB24]insulin maintain similar solution conformations which differ from the conformations taken by insulin and [LeuB25]insulin. We conclude that (a) alterations in side-chain bulk at position B24 result in long-range structural perturbations in the insulin molecule, (b) these structural alterations lead to an altered cellular processing of the two B24 insulin analogs, and (c) the selectivity of this processing arises from events subsequent to ligand-receptor recognition.