Hepatocytes from fasted rats, previously maintained as a monolayer in a serum-free glucagon-containing culture medium are demonstrated to provide a useful model system for the study of receptor-mediated mechanisms of insulin action. The cultured liver cells show glucagon- and insulin-responsive biological effects. These cultures show the long-term effects of insulin on the syntheses of protein ([3H]leucine incorporation), glycogen, and lipids (conversion of [3H]glucose) in a dose-dependent manner in the physiological range of insulin concentrations. The order of the effects of different analogues of insulin on each of the bioactivities studied at 37 degrees C is the same as their order to compete at 25 degrees C for binding to insulin-specific receptors. The characterization of radioactive products of 125I-insulin using gel filtration and anti-insulin A chain antibody has shown a transient accumulation of insulin A chain, indicating that the sequential pathway of insulin degradation is operative in the anchored, cultured hepatocytes. Whereas the synthesis of proteins proceeds linearly after insulin inoculation, the syntheses of glycogen and lipids first occur after a lag period of about 10 and 12 h, respectively. None of the three 125I-labeled fragments or products of 125I-insulin released in the culture mediums showed any biological activity (glycogenesis) in cultured hepatocytes although a high-molecular-weight 125I-product isolated from cells could not be tested because of its insolubility. The possibility that the insulin effects might have been mediated via a nonradioactive fragment of insulin or another chemical agent remains open.