Considerable evidence has shown that most physiologic responses to insulin require activation of the intrinsic tyrosine kinase of the insulin receptor. Biochemical studies have also supported the hypothesis that receptor kinase activity can be modulated by cellular protein tyrosine phosphatases (PTPases), which have not yet been identified. To test the hypothesis that the transmembrane PTPase LAR can modulate insulin receptor signaling in vivo, antisense RNA expression was used to specifically suppress LAR protein levels by 63% in the rat hepatoma cell line, McA-RH7777. Hormone-dependent autophosphorylation of the insulin receptor was increased by approximately 150% in the antisense-expressing cells at all insulin concentrations tested. This increase in autophosphorylation was paralleled by a 35% increase in insulin receptor tyrosine kinase activity. Reduced LAR levels did not alter non-hormone-dependent tyrosine phosphorylation nor basal insulin receptor tyrosine phosphorylation and kinase activity. Most significantly, reduced LAR levels resulted in a 350% increase in insulin-dependent phosphatidylinositol 3-kinase activity. These studies provide unique in vivo evidence that LAR is involved in the modulation of insulin receptor signaling in intact cells.