Insulin receptor substrate-1 (IRS-1), a substrate of various receptor tyrosine kinases transmits mitogenic signals initiated by extracellular ligands. This protein is involved in normal hepatocyte growth and has been found to be overexpressed in human hepatocellular carcinoma. Expression of a carboxy-terminal truncated IRS-1 molecule containing the pleckstrin homology and phosphotyrosine-binding domains associates with the insulin receptor and prevents tyrosyl phosphorylation of endogenous IRS-1 and Shc proteins. Thus, subsequent activation of downstream signaling molecules induced by insulin and IGF-1 such as phosphatidylinositol-3 kinase and mitogen activated protein kinase is inhibited. The morphologic features of transformed human hepatocellular carcinoma cells change to a differentiated hepatocyte appearance and characteristics of the malignant phenotype as manifested by anchorage independent cell growth and tumor formation in nude mice are lost. These studies demonstrate that signal transduction pathways mediated through or by IRS-1 are important in hepatocyte and human hepatocellular carcinoma cell growth.