To examine the role of the N-terminal part of the insulin-like growth factor I (IGF-I) receptor and insulin receptor in determining ligand specificity, we prepared an expression vector encoding a hybrid receptor where exon 1 (encoding the signal peptide and seven amino acids of the alpha-subunit), exon 2, and exon 3 of the insulin receptor were replaced with the corresponding IGF-I receptor cDNA (938 nucleotides). To allow direct quantitative comparison of the binding capabilities of this hybrid receptor with those of the human IGF-I receptor and the insulin receptor, all three receptors were expressed in baby hamster kidney (BHK) cells as soluble molecules and partially purified before characterization. The hybrid IGF-I/insulin receptor bound IGF-I with an affinity comparable to that of the wild-type IGF-I receptor. In contrast, the hybrid receptor no longer displayed high-affinity binding of insulin. These results directly demonstrate that it is possible to change the specificity of the insulin receptor to that of the IGF-I receptor and, furthermore, that the binding specificity for IGF-I is encoded within the nucleotide sequence from 135 to 938 of the IGF-I receptor cDNA. Since the hybrid receptor only bound insulin with low affinity, the insulin binding region is likely to be located within exons 2 and 3 of the insulin receptor.