Treatment of intact cultured H35 cells with trypsin (1 mg/ml) for 15 min at low temperature (4 degrees C) or for 30 sec at 37 degrees C causes activation of the insulin receptor subsequently isolated from the cells. 2. Receptor activation was assessed by increased phosphotyrosine content of the beta-subunit of the receptor, and increased autophosphorylation using [32P]-ATP. 3. Treatment of the cells for 15 min at 37 degrees C however completely abolished insulin binding and all insulin receptor kinase activity. 4. These data demonstrate that proteolytic damage of the extracellular domain of the insulin receptor can render the receptor kinase inactive and lead to a cell which is unresponsive to insulin.