In order to determine the functional significance of the extracellular loop of human thyrotropin receptor (hTSHR), two peptides composed of eight amino acids were inserted into hTSHR by ligating synthetic oligonucleotides into +1811 NCol site of hTSHR cDNA. Mutant hTSHR cDNAs which encode a hydrophobic peptide (ATVLVVPM) and a hydrophilic peptide (GTTRTVAM) between +572 Met and +573 Asp were transfected into Chinese hamster ovary (CHO) cells to develop F-cell lines and R-cell lines, respectively. Of the resulting cloned cell lines, F-29 and R-9 were shown to express mutant hTSHs at the protein level by Western blotting and at the mRNA level by reverse transcription-polymerase chain reaction (RT-PCR). We show that neither thyrotropin (TSH) nor IgGs from patients with Graves' disease stimulated cAMP production by F-29 and R-9 cells. 125I-TSH binding study revealed that F-29 and R-9 cells do not bind TSH. Our data demonstrate that the mutations impaired TSH-binding and incapacitated the cells from responding to TSH. The evidence suggests that the second extracellular loop of hTSHR has an important role in TSH and thyroid stimulating antibody (TSAb)-dependent signal transduction.