Increase in the expression of leukocyte antigen-related (LAR) protein causes insulin resistance, an important contributor to atherosclerosis. However, the function of LAR in atherosclerosis is not known. To address whether LAR is important in the response of vascular cells to atherogenic stimuli, we investigated cell proliferation, migration, and insulin-like growth factor-1 receptor (IGF-1R) signaling in wild-type and LAR(-/-) mouse vascular smooth muscle cells (VSMC) treated with IGF-1. Absence of LAR significantly enhanced proliferation and migration of VSMC compared with wild-type cells after IGF-1 treatment. U0126 and LY249002, specific inhibitors of MAPK/ERK kinase (MEK) and phosphoinositide 3-kinase, respectively, inhibited IGF-1-induced DNA synthesis and migration in both wild-type and LAR(-/-) VSMC. IGF-1 markedly enhanced IGF-1R phosphorylation in both wild-type and LAR(-/-) VSMC, but the phosphorylation was 90% higher in knock-out cells compared with wild-type cells. Absence of LAR enhanced phosphorylation of insulin receptor substrate-1 and insulin receptor substrate-1-associated phosphoinositide 3-kinase activity in VSMC treated with IGF-1. IGF-1-induced phosphorylation of ERK1/2 also increased significantly in LAR(-/-) VSMC compared with wild-type cells. Furthermore, LAR directly binds to IGF-1R in glutathione S-transferase-LAR pull-down and IGF-1R immunoprecipitation experiments and recombinant LAR dephosphorylates IGF-1R in vitro. Neointima formation in response to arterial injury and IGF-1R phosphorylation in neointima increased significantly in LAR(-/-) mice compared with wild-type mice. A significant decrease in body weight, fasting insulin, and IGF-1 levels were observed in LAR(-/-) mice compared with wild-type mice. Together, these data indicate that LAR regulates IGF-1R signaling in VSMC and dysregulation of this phosphatase may lead to VSMC hyperplasia.