We have previously shown that a homozygous mutation encoding a substitution of proline for leucine at position 233 in the insulin receptor is linked with the syndrome of leprechaunism, being a lethal form of insulin resistance in newborn children. Specific binding of insulin and insulin-stimulated autophosphorylation of the insulin receptor are nearly absent in fibroblasts from the leprechaun patient. To examine the molecular basis of the observed insulin receptor abnormalities, CHO cell lines overexpressing mutant insulin receptors were made by transfection. The results show that the mutation inhibits cleavage and transport of the proreceptor from intracellular sites to the cell surface. As the mutant receptor is poorly precipitated by two different monoclonal antibodies recognizing epitopes on undenatured wild-type alpha-subunits, the mutation probably affects overall folding of the alpha-subunit. The mutant proreceptor is unable to bind insulin and exhibits no insulin-stimulated autophosphorylation. These data explain the abnormalities seen in the patient's fibroblasts. Pulse-chase labeling experiments on transfected cells show that the mutant precursor has an extended half-life (approximately 5 h) compared to the precursor of wild-type insulin receptors (approximately 2 h). This mutation is the first example of a naturally occurring mutation in the insulin receptor which completely blocks cleavage of the proreceptor and transport to the cell surface.