Post-receptor or post-binding events in the action of insulin have been investigated in cultured skin fibroblasts from an infant with leprechaunism. Both diminished binding of insulin and multiplication-stimulating activity (MSA) to these cells as well as deficits distal to binding were described in a previous publication. Exposure of control fibroblasts to low concentrations (0.001 to 0.01%) of trypsin for one min without glucose in the medium activated the enzyme glycogen synthase; activation was less than that observed with a maximally effective concentration (10(-6) M) of insulin alone. In cells from the patient with leprechaunism, the effect of trypsin was much smaller than in the control fibroblasts. Exposing the control cells to soybean trypsin inhibitor before addition of trypsin prevented activation of glycogen synthase and demonstrated the specificity of the proteolytic action of trypsin. The rates of activation and inactivation of glycogen synthase in vitro were similar in extracts of the control subject's and the patient's fibroblasts and indicated that the enzymes regulating the phosphorylation/dephosphorylation of glycogen synthase were intact in the patient's cells. Total glycogen synthase activity and glycogen content were also indistinguishable in control and leprechaun fibroblasts. These results are compatible with the presence of an abnormality in the structure or availability of the protease substrate from which chemical mediators of insulin action are formed in the patient's cells. Two possible models for a receptor-coupling complex are proposed. Either a mutation in a regulator-substrate unit of the receptor-coupling complexes for insulin and certain insulin-like growth factors or an alteration in the environment of the unit are postulated to explain the findings.