In response to insulin, tyrosine kinase activity of the insulin receptor is stimulated, leading to autophosphorylation and tyrosine phosphorylation of proteins including insulin receptor subunit (IRS)-1, IRS-2, and Shc. Phosphorylation of these proteins leads to activation of downstream events that mediate insulin action. Insulin receptor kinase activity is requisite for the biological effects of insulin, and understanding regulation of insulin receptor phosphorylation and kinase activity is essential to understanding insulin action. Receptor tyrosine kinase activity may be altered by direct changes in tyrosine kinase activity, itself, or by dephosphorylation of the insulin receptor by protein-tyrosine phosphatases. After 1 min of insulin stimulation, the insulin receptor was tyrosine phosphorylated 8-fold more and Shc was phosphorylated 50% less in 32D cells containing both IRS-1 and insulin receptors (32D/IR+IRS-1) than in 32D cells containing only insulin receptors (32D/IR), insulin receptors and IRS-2 (32D/IR+IRS-2), or insulin receptors and a form of IRS-1 that cannot be phosphorylated on tyrosine residues (32D/IR+IRS-1F18). Therefore, IRS-1 and IRS-2 appeared to have different effects on insulin receptor phosphorylation and downstream signaling. Preincubation of cells with pervanadate greatly decreased protein-tyrosine phosphatase activity in all four cell lines. After pervanadate treatment, tyrosine phosphorylation of insulin receptors in insulin-treated 32D/IR, 32D/ IR+IRS-2, and 32D/IR+IRS-1F18 cells was markedly increased, but pervanadate had no effect on insulin receptor phosphorylation in 32D/IR+IRS-1 cells. The presence of tyrosine-phosphorylated IRS-1 appears to increase insulin receptor tyrosine phosphorylation and potentially tyrosine kinase activity via inhibition of protein-tyrosine phosphatase(s). This effect of IRS-1 on insulin receptor phosphorylation is unique to IRS-1, as IRS-2 had no effect on insulin receptor tyrosine phosphorylation. Therefore, IRS-1 and IRS-2 appear to function differently in their effects on signaling downstream of the insulin receptor. IRS-1 may play a major role in regulating insulin receptor phosphorylation and enhancing downstream signaling after insulin stimulation.