Transgenic mice which overexpress kinase-deficient human insulin receptors in muscle were used to study the relationship between insulin receptor tyrosine kinase and the in vivo activation of several downstream signaling pathways. Intravenous insulin stimulated insulin receptor tyrosine kinase activity by 7-fold in control muscle versus < or = 1.5-fold in muscle from transgenic mice. Similarly, insulin failed to stimulate tyrosyl phosphorylation of receptor beta-subunits or insulin receptor substrate 1 (IRS-1) in transgenic muscle. Insulin substantially stimulated IRS-1-associated phosphatidylinositol (PI) 3-kinase in control versus absent stimulation in transgenic muscles. In contrast, insulin-like growth factor 1 modestly stimulated PI 3-kinase in both control and transgenic muscle. The effects of insulin to stimulate p42 mitogen-activated protein kinase and c-fos mRNA expression were also markedly impaired in transgenic muscle. Specific immunoprecipitation of human receptors followed by measurement of residual insulin receptors suggested the presence of hybrid mouse-human heterodimers. In contrast, negligible hybrid formation involving insulin-like growth factor 1 receptors was evident. We conclude that (i) transgenic expression of kinase-defective insulin receptors exerts dominant-negative effects at the level of receptor auto-phosphorylation and kinase activation; (ii) insulin receptor tyrosine kinase activity is required for in vivo insulin-stimulated IRS-1 phosphorylation, IRS-1-associated PI 3-kinase activation, phosphorylation of mitogen-activated protein kinase, and c-fos gene induction in skeletal muscle; (iii) hybrid receptor formation is likely to contribute to the in vivo dominant-negative effects of kinase-defective receptor expression.