The insulin receptor has been shown to be a protein kinase which phosphorylates its substrates on tyrosine residues. To examine the acceptor specificity of affinity-purified insulin receptor/kinase, hydroxyamino acid containing analogues of the synthetic peptide substrate Arg-Arg-Leu-Ile-Glu-Asp-Ala-Glu-Tyr-Ala-Ala-Arg-Gly were prepared. Substitution of serine, threonine, or D-tyrosine for L-tyrosine completely ablated the acceptor activity of the synthetic peptides. These peptides, along with a phenylalanine-containing analogue, did serve as competitive inhibitors of the insulin receptor/kinase with apparent Ki values in the range of 2-4 mM. These data suggest that the insulin receptor/kinase is specific for tyrosine residues in its acceptor substrate and imply that serine phosphate or threonine phosphate present in receptor is due to phosphorylation by other protein kinases. The kinetics of the phosphorylation of the L-tyrosine-containing peptide were examined by using prephosphorylated insulin receptor/kinase. Prephosphorylation of the receptor was necessary to maximally activate the kinase and to linearize the initial velocity of the peptide phosphorylation reaction. The data obtained rule out a ping-pong mechanism and are consistent with a random-order rapid-equilibrium mechanism for the phosphorylation of this peptide substrate. Additional experiments demonstrated that the autophosphorylated insulin receptor was not able to transfer the preincorporated phosphate to the synthetic peptide substrate. Thus, the insulin receptor/kinase catalyzes the reaction via a mechanism that does not involve transfer of phosphate from a phosphotyrosine-containing enzyme intermediate.