We studied the phosphorylation of the beta subunit of the insulin receptor in intact freshly isolated rat hepatocytes, labelled with [32P]Pi. Insulin receptors partially purified by wheat-germ agglutinin chromatography were immunoprecipitated with either antibodies to insulin receptor or antibodies to phosphotyrosine. Receptors derived from cells incubated in the absence of insulin contained only phosphoserine. Addition of insulin to hepatocytes led to a dose-dependent increase in receptor beta-subunit phosphorylation, with half-maximal stimulation being observed at 2 nM-insulin. Incubation of cells with 100 nM-insulin showed that, within 1 min of exposure to the hormone, maximal receptor phosphorylation occurred, which was followed by a slight decrease and then a plateau. This insulin-induced stimulation of its receptor phosphorylation was largely accounted for by phosphorylation on tyrosine residues. Sequential immunoprecipitation of receptor with anti-phosphotyrosine antibodies and with anti-receptor antibodies, and phosphoamino acid analysis of the immunoprecipitated receptors, revealed that receptors that failed to undergo tyrosine phosphorylation were phosphorylated on serine residues. The demonstration of a functional hormone-sensitive insulin-receptor kinase in normal cells strongly supports a role for this receptor enzymic activity in mediating biological effects of insulin.