We have recently proposed that "down regulation" of the insulin receptor may be one of the many biological responses of a cell to insulin. In an attempt to further explore this hypothesis we have studied insulin action, binding, and degradation in freshly isolated hepatocytes from rats rendered insulin resistant by the administration of dexamethasone, 1.0 mg/kg every other day, for 1 and 4 wk, and in dexamethasone-treated (0.1 muM for 24 h) primary cultures of hepatocytes from normal rats. Dexamethasone treatment for 1 and 4 wk resulted in significant hyperinsulinemia and euglycemia when compared with age- and weight-matched control animals. Freshly isolated hepatocytes from rats treated with dexamethasone for 1 wk bound less insulin than cells from control animals. This decrease in insulin binding was reflected in a decrease in the total number of cellular insulin receptors upon solubilization of the cells. Insulin action was evaluated by the ability of insulin to stimulate the uptake of alpha-aminoisobutyric acid. The basal rate of aminoisobutyrate uptake in freshly isolated hepatocytes was enhanced by 1 wk of dexamethasone treatment, and although there was an apparent shift to the right in the dose-response curve for insulin-stimulated aminoisobutyrate uptake, at no insulin concentration was there a significant difference in the uptake by hepatocytes from control and dexamethasone-treated animals. This was true whether expressed as a percentage or absolute increment above basal. Insulin degradation was enhanced in hepatocytes from animals treated with dexamethasone for 1 wk but could not account for the observed changes in insulin binding. Hepatocytes from animals treated with dexamethasone for 4 wk were resistant to insulin with regard to aminoisobutyrate uptake, yet both insulin binding and insulin degradation returned to the levels observed in hepatocytes from control animals. Primary cultures of hepatocytes from normal rats exposed to dexamethasone, 0.1 muM, in vitro for 24 h were similar to hepatocytes from rats treated with dexamethasone for 4 wk in that they were insulin resistant with regard to aminoisobutyrate uptake and had normal to increased insulin binding. Insulin degradation was also similar. These cells were resistant to the ability of insulin, 0.1 muM, to down regulate its receptor whereas parallel cultures treated with insulin in the absence of dexamethasone had a 52% decrease in insulin binding. These data indicate that hepatocytes that are insulin responsive respond to in vivo hyperinsulinemia by a decrease in the number of insulin receptors and by increased insulin degradation. Hepatocytes rendered resistant to insulin both in vivo and in vitro are resistant to these effects of insulin. These studies emphasize the importance of postbinding events in the modulation of insulin binding, action, and degradation, and support the hypothesis that down regulation of the hepatocyte insulin receptor is one of the many biological actions of insulin. They also help explain how a cell can be insulin resistant and have a normal number of insulin binding sites in the presence of hyperinsulinemia.