Although insulin-like growth factor I (IGF-I) is a mitogenic growth factor, its role in tumorigenesis is unclear. We therefore transfected wild-type and truncated beta-subunit mutant (952STOP) human IGF-I receptor cDNAs into Rat-1 fibroblasts. Rat-1 transfectants expressed 2.5- to 7-fold increased IGF-I receptor mass, while the Kd for IGF-I binding was unchanged. The Rat-1 cells transfected with wild-type receptor cDNA responded to in vitro IGF-I treatment by increased proliferation and DNA synthesis. Cells overexpressing wild-type receptors were also transformed as evidenced by ligand-dependent colony proliferation in soft agar. After injection into athymic nude mice, all wild-type transfectants formed solid sarcomas within 3 weeks, and ex vivo tumor cell assays confirmed continued overexpression of human IGF-I receptors. In contrast, both DNA synthesis and proliferation of 952STOP-transfected cells were attenuated below that of untransfected cells. 952STOP cells were nonresponsive to IGF-I in vitro and were unable to sustain anchorage-independent growth. No tumors were induced for up to 8 weeks after injection of 952STOP transfectants into athymic mice, despite the presence of demonstrable endogenous IGF-I receptors on the 952STOP-transfected cells. Therefore, 952STOP behaves as a dominant negative inhibitor of endogenous IGF-I receptor function, probably by assembling nonfunctional hybrid rat/mutant human receptor tetramers.