The ATDC5 chondrogenic cell line is typically induced to differentiate by exposure to insulin at high concentration (10 microg/ml, approximately 1600 nM). Differentiation can also be induced by physiological concentrations of insulin-like growth factor-I (IGF-I). Unlike previous reports, we observed a stimulation of differentiation, as measured by collagen X expression and Alcian Blue staining for proteoglycan synthesis, upon exposure to insulin at concentrations (10-50 nM) consistent with signaling via the insulin receptor. Analysis of lysates from proliferating and hypertrophic ATDC5 cells demonstrated that exposure to 50 nM insulin induced tyrosine phosphorylation of insulin receptors but not IGF-I receptors or hybrid receptors. In contrast to the potent effects of IGF-I to stimulate both ATDC5 proliferation and differentiation, insulin was not as potent as IGF-I as a proliferating agent but more selectively a differentiating agent. Consistent with this result, insulin was less potent than IGF-I in inducing activation of the Erk1/Erk2 mitogenic signaling pathway. Furthermore, Erk pathway inhibition did not enhance the differentiating effects of insulin as it does in the case of IGF-I exposure. Extending our observations to fetal rat metatarsal explants, we observed significant stimulation of bone growth by 50 nM insulin. This could be accounted for by a disproportionate stimulatory effect on growth of the hypertrophic zone. The proliferative zone was not significantly affected. Based on our results in both ATDC5 cells and metatarsal explants, we conclude that the insulin functioning through insulin receptor has a dominant effect as an inducer of chondrocyte differentiation. These results support assignment of a physiological role for this hormone in linear bone growth.