Since the discovery of insulin nearly 70 years ago, there has been no problem more fundamental to diabetes research than understanding how insulin works at the cellular level. Insulin binds to the alpha subunit of the insulin receptor which activates the tyrosine kinase in the beta subunit, but the molecular events linking the receptor kinase to insulin-sensitive enzymes and transport processes are unknown. Our discovery that insulin stimulates tyrosine phosphorylation of a protein of relative molecular mass between 165,000 and 185,000, collectively called pp185, showed that the insulin receptor kinase has specific cellular substrates. The pp185 is a minor cytoplasmic phosphoprotein found in most cells and tissues; its phosphorylation is decreased in cells expressing mutant receptors defective in signalling. We have now cloned IRS-1, which encodes a component of the pp185 band. IRS-1 contains over ten potential tyrosine phosphorylation sites, six of which are in Tyr-Met-X-Met motifs. During insulin stimulation, the IRS-1 protein undergoes tyrosine phosphorylation and binds phosphatidylinositol 3-kinase, suggesting that IRS-1 acts as a multisite 'docking' protein to bind signal-transducing molecules containing Src-homology 2 and Src-homology-3 domains. Thus IRS-1 may link the insulin receptor kinase and enzymes regulating cellular growth and metabolism.