Osteoporosis is a known complication of diabetes mellitus, suggesting a role for insulin in bone homeostasis. We studied insulin receptors and insulin action in the osteoblast-like rat osteogenic sarcoma cell line ROS 17/2.8. These cells share many common features with the osteoblast, such as 1,25-dihydroxyvitamin D3 receptors, PTH receptors, and 1,25-dihydroxyvitamin D3-induced modulation of alkaline phosphatase activity and osteocalcin. Competition binding studies revealed high affinity insulin receptors, with an ED50 for insulin of 1 nM. The receptors were highly specific for insulin, with 60% inhibition of insulin binding by an antireceptor antibody, no competition by epidermal growth factor, and an ED50 of 300 nM for proinsulin. Steady state maximal insulin binding was obtained by 40 min at 37 C, and insulin degradation, as measured by trichloroacetic acid solubility, was 1%/h at 37 C. ROS cells readily internalized insulin, and under steady state binding conditions at 37 C, 56% of the cell-associated radioactivity consisted of intracellular material. Chloroquine (100 microM) inhibited intracellular processing of insulin, leading to a 300% increase in cell-associated insulin by 2 h (37 C). Photoaffinity labeling of the insulin receptor with the photosensitive analog of insulin, B2 (2-nitro-4-azidophenyl-acetyl)des-pheB1-insulin, followed by solubilization and sodium dodecyl sulfate-polyacrylamide gel electrophoresis, revealed specific bands of 125K and 430K mol wt under reducing and nonreducing conditions, respectively. Thus, the structure of insulin receptors in ROS cells appears comparable to that of insulin receptors of known target tissues. Insulin action was also examined. Insulin did not stimulate [2-3H]deoxyglucose uptake or [1-14C]leucine incorporation into protein. In contrast, physiological concentrations of insulin inhibited alkaline phosphatase activity in nonconfluent cells. After exposure to insulin for 24 h, alkaline phosphatase activity was decreased compared to basal by 39.5% and 50% with 5 and 50 ng/ml insulin, respectively. In conclusion, ROS cells bind insulin to specific receptors that are similar to insulin receptors on other target tissues; receptors internalize insulin, which is then processed through a chloroquine-sensitive pathway; insulin does not affect membrane substrate transport; and insulin does inhibit the activity of an enzyme that is important in bone metabolism. ROS cells represent a model for studying insulin effects on bone.