Leprechaunism is a genetic form of insulin resistance characterized by severe growth retardation and early death. To clarify the molecular basis of the insulin resistance, we investigated the insulin binding and kinase properties of the insulin receptor and the receptor gene in cultured skin fibroblasts of two patients (Ark-1 and Ark-2) with leprechaunism and in those of three of their parents. Specific insulin binding to fibroblasts was markedly reduced (less than 25% of control) in both patients with leprechaunism but was essentially normal in the parents. In contrast, insulin receptor autophosphorylation in 1% Triton X-100 cell lysates was reduced in both patients and parents. In Ark-1, the 70% reduction in autophosphorylation correlated with the decrease in binding, whereas in Ark-2 and in the three parents included in the study, autophosphorylation of the insulin receptor was reduced below the level accounted for by a change in receptor content. Analysis of the insulin receptor gene by hybridization with the receptor cDNA probes revealed no gross defect in either Ark-1 or Ark-2. Both parents of Ark-2 were heterozygous for a restriction fragment length polymorphism in the beta-subunit detected with Bam HI digestion (observed in 15% of controls). Ark-2 was homozygous for the more common allele of this polymorphism (observed in 84% of controls). Thus, we have biochemically characterized a new family of leprechaunism (Ark-2) and have found insulin receptor phosphorylation defects in their phenotypically normal parents.