Cloning of the insulin receptor cDNA has earlier revealed the existence of two alternative forms of the receptor differing by the presence or absence of 12 amino acids near the C-terminus of the receptor alpha-subunit. This insert has been shown by others to be encoded by a discrete exon, and alternative splicing of this exon leads to tissue-specific expression of two receptor isoforms. We have studied the functional significance of the receptor isoforms and have confirmed that they are generated by alternative splicing. When cDNAs encoding the two forms of the insulin receptors are expressed in Rat 1 cells, the receptor lacking the insert (HIR-A) has a significantly higher affinity for insulin than the receptor with the insert (HIR-B). This difference in affinity is maintained when insulin binding activity is assayed in solution using detergent solubilized, partially purified receptors. These data, combined with the tissue specificity of HIR-A and HIR-B expression, suggest that alternative splicing may result in the modulation of insulin metabolism or responsiveness by different tissues.