We have identified a novel mutation of the human insulin receptor gene in a previously unreported patient with leprechaunism, leprechaun Rochester. This mutation consists of deletion of three nucleotides (GAA) in exon 2 and results in loss of the lysine-121 in the putative ligand-binding domain of the alpha-subunit. To analyze this mutation, we prepared a corresponding mutant insulin receptor by site-directed mutagenesis and expressed the receptor in Chinese hamster ovary cells. Although the mutant receptor displayed normal insulin binding, abnormalities were found in autophosphorylation and in phosphorylation of endogenous and exogenous protein substrates. These abnormalities consisted of increased basal kinase activity, but blunted insulin-stimulated responsiveness. Importantly, cells that expressed the mutant receptor showed markedly decreased insulin- and serum-stimulated DNA synthesis compared to untransfected control cells and cells transfected with the wild-type insulin receptor. These findings suggest that deletion of lysine-121 in conjunction with a presumed, but thus far unidentified, second mutant allele contributed significantly to the lethal insulin-resistant state in this patient with leprechaunism.