The insulin receptor phosphorylates insulin receptor substrate-1 (IRS-1) and Shc on tyrosine residues, both of which associate with the protein-abundant Src homology/growth factor receptor-bound protein 2(ASH/GRB2) leading to p21ras activation. Juxtamembrane Tyr960 of the insulin receptor required for tyrosine phosphorylation of both IRS-1 and Shc is contained in the NPXY motif, which is also present in other tyrosine kinase receptors and oncogene products. In this study, the role of this motif in insulin's signaling was examined in Chinese hamster ovary cells expressing insulin receptors with mutations in this motif. All alterations in Tyr960 examined decreased tyrosine phosphorylation of both IRS-1 and Shc to a similar extent. The replacements of Asn957 and the deletion of NPE impaired tyrosine phosphorylation of Shc and IRS-1, although tyrosine phosphorylation of Shc was more severely affected than that of IRS-1. The amount of ASH/GRB2 bound to IRS-1 and Shc in vitro and in vivo was also decreased in these cells. These data suggest that the NPXY motif in the insulin receptor is important for tyrosine phosphorylation of both IRS-1 and Shc as well as subsequent signaling.