The precise nature of the insulin-binding site of the insulin receptor (IR) has not been determined, although the importance of several regions of the alpha-subunit in insulin binding has been demonstrated. A naturally occurring mutation in a patient with severe insulin resistance that changes the Ser323 codon in the alpha-subunit of the IR to a leucine codon is associated with markedly impaired insulin binding to cells from the patient and to transfected cells expressing the mutant receptor. However, unlike other IR alpha-subunit mutations associated with decreased insulin binding, this mutation does not lead to a defect in posttranslational processing or cell-surface expression of IRs. Thus, the defect in insulin binding associated with the Leu323 mutant IR is a direct result of an alteration in the insulin-binding site. No natural IR mutation described thus far is associated with both decreased insulin binding and normal cell-surface expression of the mutant receptor. This study demonstrates the critical role that Ser323 of the IR alpha-subunit plays in insulin binding, either by forming part of the binding site or by stabilizing its conformation.