We have studied the functions of the juxtamembrane domain (941-989) of the human insulin receptor by site-directed mutagenesis. Tyrosine phosphorylation of pp185 was impaired in Chinese hamster ovary cells expressing the receptors with the alteration of Tyr960, but not of Tyr953 or Tyr972, to Phe (CHO-Y960F cells) as compared with cells expressing the normal receptors. In CHO-Y960F cells, tyrosine phosphorylation of insulin receptor substrate-1 (IRS-1), the activation of phosphatidylinositol 3-kinase in the anti-phosphotyrosine and anti-IRS-1 immunoprecipitates, the activation of mitogen-activated protein (MAP) kinase, and biological actions were also impaired. In addition, although the deletion of residues 954-965 severely impaired insulin internalization, the deletion of NPXY (957-960), the internalization signal of the low density lipoprotein receptor, did not affect internalization. Moreover, neither the deletions around Tyr953 nor the alterations of the tyrosines (953, 960, or 972) significantly reduced internalization. These data suggest that: 1) Tyr960 is important for the recognition of pp185/IRS-1, the association of phosphatidylinositol 3-kinase with pp185/IRS-1, and the activation of MAP kinase; 2) MAP kinase may lie downstream of pp185/IRS-1 in insulin's signal transduction; and 3) the juxtamembrane domain, but not NPXY or individual tyrosines, is important for insulin internalization.