The principal substrate for the insulin and insulin-like growth factor-1 (IGF-1) receptors is the cytoplasmic protein insulin-receptor substrate-1 (IRS-1/pp185). After tyrosine phosphorylation at several sites, IRS-1 binds to and activates phosphatidylinositol-3'-OH kinase (PI(3)K) and several other proteins containing SH2 (Src-homology 2) domains. To elucidate the role of IRS-1 in insulin/IGF-1 action, we created IRS-1-deficient mice by targeted gene mutation. These mice had no IRS-1 and showed no evidence of IRS-1 phosphorylation or IRS-1-associated PI(3)K activity. They also had a 50 per cent reduction in intrauterine growth, impaired glucose tolerance, and a decrease in insulin/IGF-1-stimulated glucose uptake in vivo and in vitro. The residual insulin/IGF-1 action correlated with the appearance of a new tyrosine-phosphorylated protein (IRS-2) which binds to PI(3)K, but is slightly larger than and immunologically distinct from IRS-1. Our results provide evidence for IRS-1-dependent and IRS-1-independent pathways of insulin/IGF-1 signalling and for the existence of an alternative substrate of these receptor kinases.