Expression of the insulin receptor substrate-1 (IRS1) or Shc cDNA resulted in both increased protein and insulin-stimulated tyrosine phosphorylation of IRS1 and Shc proteins, respectively. Although expression of Shc had no significant effect on insulin-stimulated mitogen-activated protein (MAP) kinase gel shift or c-fos transcriptional activation, expression of IRS1 inhibited these responses. The effect of IRS1 expression on the formation of multisubunit signaling complexes was determined by a series of indirect co-immunoprecipitations. Grb2 immunoprecipitation from IRS1-transfected and insulin-treated cells demonstrated an increased coimmunoprecipitation of Syp and the p85 regulatory subunit of the phosphatidylinositol 3-kinase. Similarly, cell extracts immunoprecipitated with a p85 antibody displayed an increased co-immunoprecipitation of Syp and Grb2. However, expression of IRS1 increased the extent of Grb2 associated with IRS1 with a concomitant reduction in the amount of Grb2 associated with Shc. Furthermore, increased expression of Shc reduced the amount of Grb2 bound to IRS1 with a concomitant increase in Grb2 associated with Shc. Together, these data demonstrate that IRS1 and Shc compete for a limited cellular pool of Grb2, and insulin activation of MAP kinase and c-fos transcription predominantly occur through the Shc-Grb2 signaling pathway.