The proinsulin C-peptide has been held to be merely a by-product in insulin biosynthesis, but recent reports show that it elicits both molecular and physiological effects, suggesting that it is a hormonally active peptide. Specific binding of C-peptide to the plasma membranes of intact cells and to detergent-solubilised cells has been shown, indicating the existence of a cell surface receptor for C-peptide. C-peptide elicits a number of cellular responses, including Ca(2+) influx, activation of mitogen-activated protein (MAP) kinases, of Na(+),K(+)-ATPase, and of endothelial NO synthase. The pentapeptide EGSLQ, corresponding to the C-terminal five residues of human C-peptide, mimics several of the effects of the full-length peptide. The pentapeptide displaces cell membrane-bound C-peptide, elicits transient increase in intracellular Ca(2+) concentration and stimulates MAP kinase signalling pathways and Na(+),K(+)-ATPase. The Glu residue of the pentapeptide is essential for displacement of the full-length C-peptide, and free Glu can partly displace bound C-peptide, suggesting that charge interactions are important for receptor binding. Many C-peptide effects, such as phosphorylation of MAP-kinases ERK 1 and 2, stimulation of Na(+),K(+)-ATPase and increases in intracellular calcium concentrations are inhibited by pertussis toxin, supporting interaction of C-peptide with a G-protein-coupled receptor. However, all C-peptide effects cannot be explained in this manner, and it is possible that additional interactions are involved. Combined, the available observations show that C-peptide is biologically active and suggest a molecular model for its physiological effects.