To study the role of the insulin receptor in determining adipocyte differentiation of the mouse cell line 3T3-L1, we have introduced a mutation that inactivates the insulin receptor gene by homologous recombination. In two independent clones, inactivation of one allele of the insulin receptor gene was associated with a 50-70% reduction in the number of insulin receptors. In addition, both clones were markedly impaired in their ability to differentiate into adipocytes. The defect in adipocyte-specific differentiation was corrected by expression of transfected human insulin receptor cDNA. These data suggest that the insulin receptor may play an important role in promoting differentiation of 3T3-L1 cells into adipocytes in vitro.