Defective bone formation is common in patients with diabetes, suggesting that insulin normally exerts anabolic actions in bone. However, because insulin can cross-activate the insulin-like growth factor type 1 receptor (IGF-1R), which also functions in bone, it has been difficult to establish the direct (IGF-1-independent) actions of insulin in osteoblasts. To overcome this problem, we examined insulin signaling and action in primary osteoblasts engineered for conditional disruption of the IGF-1 receptor (DeltaIGF-1R). Calvarial osteoblasts from mice carrying floxed IGF-1R alleles were infected with adenoviral vectors expressing the Cre recombinase (Ad-Cre) or green fluorescent protein (Ad-GFP) as control. Disruption of IGF-1R mRNA (>90%) eliminated IGF-1R without affecting insulin receptor (IR) mRNA and protein expression and eliminated IGF-1R/IR hybrids. In DeltaIGF-1R osteoblasts, insulin signaling was markedly increased as evidenced by increased phosphorylation of insulin receptor substrate 1/2 and enhanced ERK/Akt activation. Microarray analysis of RNA samples from insulin-treated, DeltaIGF-1R osteoblasts revealed striking changes in several genes known to be downstream of ERK including Glut-1 and c-fos. Treatment of osteoblasts with insulin induced Glut-1 mRNA, increased 2-[1,2-(3)H]-deoxy-d-glucose uptake, and enhanced proliferation. Moreover, insulin treatment rescued the defective differentiation and mineralization of DeltaIGF-1R osteoblasts, suggesting that IR signaling can compensate, at least in part, for loss of IGF-1R signaling. We conclude that insulin exerts direct anabolic actions in osteoblasts by activation of its cognate receptor and that the strength of insulin-generated signals is tempered through interactions with the IGF-1R.