Recently, a mutation substituting Leu for Ser323 in the alpha-subunit of the human insulin receptor has been identified in an insulin-resistant patient. The Leu323 mutation leads to a severe impairment in insulin binding without significantly altering the processing or cell surface expression of the receptor. In order to study how alpha beta half-receptors interact to form the insulin-binding site, we cotransfected NIH-3T3 cells with two insulin receptor cDNA constructs: a truncated insulin receptor lacking the C-terminal 43 amino acids (delta 43) and the full-length Leu323 mutant receptor. A clonal cell line from cotransfected cells expresses a hybrid receptor consisting of a Leu323 half-receptor and a delta 43 half-receptor. We demonstrate that the Leu323-delta 43 hybrid receptor binds insulin with high affinity. Furthermore, by cross-linking 125I-insulin to immobilized hybrid receptors, we show that only the alpha beta delta half of the hybrid receptor binds insulin. Since the isolated half-insulin receptor has low affinity for insulin, this suggests that the addition of even a non-binding alpha-subunit can result in high affinity binding to the holoreceptor (alpha alpha mut beta delta beta). Both beta and beta delta-subunits of the Leu323-delta 43 hybrid receptor are phosphorylated in vivo and in vitro in an insulin-dependent manner, suggesting an intramolecular transphosphorylation mechanism and that the presence of the Leu323 mutant receptor that lacks an intrinsic high affinity binding site does not prevent the associated beta-subunit from functioning either as a tyrosine kinase or as a phosphate acceptor in the hybrid insulin receptor molecule (alpha alpha mut beta delta beta). Furthermore, we show that the hybrid receptor can phosphorylate insulin receptor substrate-1 (IRS-1) in response to insulin and can be coimmunoprecipitated together with IRS-1 by anti-IRS-1 antibody.