We have identified a patient with mild diabetes, marked fasting hyperinsulinemia (89 to 130 microU of insulin per milliliter), and a reduced fasting C-peptide: insulin molar ratio of 1.11 to 1.50 (normal, greater than 4). The patient responded normally to exogenous insulin. However, her endogenous immunoreactive insulin showed reduced biologic activity during a glucose-clamp study with hyperglycemia and a reduced ability to bind to the insulin receptor and stimulate glucose transport in vitro. Family studies showed that five additional relatives in three generations had variable degrees of glucose intolerance, marked hyperinsulinemia, and a reduced peripheral C-peptide:insulin molar ratio. Restriction-endonuclease cleavage of DNA isolated from circulating leukocytes in the patient and in family members with hyperinsulinemia revealed loss of the MboII recognition site in one allele of the insulin gene--consistent with a point mutation at position 24 or 25 in the insulin B chain. Other studies using high-pressure liquid chromatography and detailed gene analysis have identified the defect as a serine for phenylalanine substitution at position 24 of the insulin B chain. The secretion of a structurally abnormal insulin should be considered in patients with hyperinsulinemia who respond normally to exogenous insulin and have a reduced C-peptide:insulin molar ratio. Glucose tolerance may range from relatively normal to overtly diabetic.