In a previous analysis, we identified a point mutation that substituted Pro (CCG) for Leu (CTG) at amino acid 87 in the alpha-subunit of the insulin receptor (IR) in a Japanese patient with leprechaunism. In the present study, we transfected either the wild type (Leu-87) or the mutant (Pro-87) IR cDNA into NIH3T3 cells. Pulse-chase in nonreducing conditions revealed that the dimerization of Pro-87 IR was slightly impaired. However, cell surface biotinylation showed that Pro-87 IR was transported to the cell surface. The Pro-87 IR reduced the insulin binding affinity to about 15% of Leu-87 IR, and the dissociation of insulin in Pro-87 IR was more rapid than in Leu-87 IR. The autophosphorylation of Pro-87 IR was less sensitive to insulin than that of Leu-87 IR, suggesting the reduced insulin binding affinity. Site-directed mutagenesis at amino acid 87 was performed to substitute Ile or Ala for Leu. Both mutant IRs were transported to the cell surface and labeled by cell surface biotinylation. The Ile-87 IR enhanced the insulin binding affinity about 4-fold. The insulin binding affinity of Ala-87 IR was reduced by 85% relative to that of Leu-87 IR. In addition, the dissociation of insulin in Ile-87 IR was slower than in Leu-87 IR, but in Ala-87 IR it was more rapid. These results provide the first direct evidence for a critical role of Leu-87 in binding insulin.