We have shown previously that experimental modifications of the cellular lipid composition of an insulin-sensitive rat hepatoma cell line (Zajdela Hepatoma Culture, ZHC) affect both binding and biological actions of insulin. Discrepancies between insulin binding and actions implied a postbinding defect, responsible for the observed insulin resistance in lipid-treated cells. To elucidate the mechanism for this defect, we have studied insulin binding and insulin receptor kinase activity in partially purified receptor preparations from ZHC cells grown either in normal medium or in medium supplemented with linoleic acid or 25-hydroxycholesterol. Insulin binding to the lectin-purified insulin receptor showed only a small alteration in receptor affinity for the preparations from lipid-treated cells. Insulin-stimulated autophosphorylation of the beta-subunit of the insulin receptor, as well as insulin-induced phosphorylation of the artificial substrate poly(Glu,Tyr)4:1, was significantly decreased in the preparations from lipid-modified cells. Although differences in basal levels were observed, the magnitude of the insulin-stimulated kinase activity was significantly decreased in receptor preparations from lipid-treated cells. These findings indicate that experimental modification of the lipids of cultured hepatoma cells can produce in insulin receptor kinase activity changes that are proportional to the reduced insulin action observed in these cells.