The regulation of kinase activity associated with insulin receptor by phosphorylation and dephosphorylation has been examined using partially purified receptor immobilized on insulin-agarose. The immobilized receptor preparation exhibits predominately tyrosine but also serine and threonine kinase activities toward insulin receptor beta subunit and exogenous histone. Phosphorylation of the insulin receptor preparation with increasing concentrations of unlabeled ATP, followed by washing to remove the unreacted ATP, results in a progressive activation of the receptor kinase activity when assayed in the presence of histone and [gamma-32P]ATP. A maximal 4-fold activation is achieved by prior incubation of receptor with concentrations of ATP approaching 1 mM. High pressure liquid chromatographic analysis of tryptic hydrolysates of the 32P-labeled insulin receptor beta subunit reveals three domains of phosphorylation (designated peaks 1, 2, and 3). Phosphotyrosine and phosphoserine residues are present in these three domains while peak 2 contains phosphothreonine as well. Thus, at least seven sites are available for phosphorylation on the beta subunit of the insulin receptor. Incubation of the phosphorylated insulin receptor with alkaline phosphatase at 15 degrees C results in the selective dephosphorylation of the phosphotyrosine residues on the beta subunit of the receptor while the phosphoserine and phosphothreonine contents are not affected. The dephosphorylation of the receptor is accompanied by a marked 65% inhibition of the receptor kinase activity. Almost 90% of the decrease in [32P]phosphate content of the receptor after alkaline phosphatase treatment is accounted for by a decrease in phosphotyrosine content in peak 2, while very small decreases are observed in peaks 1 and 3, respectively. These results demonstrate that the extent of phosphorylation of tyrosine residues in receptor domain 2 closely parallels the receptor kinase activity state, suggesting phosphorylation of this domain may play a key role in regulating the insulin receptor tyrosine kinase.