pp120, a substrate of the insulin receptor tyrosine kinase, is a plasma membrane glycoprotein that is expressed in the hepatocyte as two spliced isoforms differing by the presence (full-length) or absence (truncated) of most of the intracellular domain including all phosphorylation sites. Co-expression of full-length pp120, but not its phosphorylation-defective isoforms, increased receptor-mediated insulin endocytosis and degradation in NIH 3T3 fibroblasts. We, herein, examined whether internalization of pp120 is required to mediate its effect on insulin endocytosis. The amount of full-length pp120 expressed at the cell surface membrane, as measured by biotin labeling, markedly decreased in response to insulin only when insulin receptors were co-expressed. In contrast, when phosphorylation-defective pp120 mutants were co-expressed, the amount of pp120 expressed at the cell surface did not decrease in response to insulin. Indirect immunofluorescence analysis revealed that upon insulin treatment of cells co-expressing insulin receptors, full-length, but not truncated, pp120 co-localized with alpha-adaptin in the adaptor protein complex that anchors endocytosed proteins to clathrin-coated pits. This suggests that full-length pp120 is part of a complex of proteins required for receptor-mediated insulin endocytosis and that formation of this complex is regulated by insulin-induced pp120 phosphorylation by the receptor tyrosine kinase. In vitro GST binding assays and co-immunoprecipitation experiments in intact cells further revealed that pp120 did not bind directly to the insulin receptor and that its association with the receptor may be mediated by other cellular proteins.