Insulin-like growth factors (IGFs) induce proliferation of various cell types and play important roles in somatic growth and cancer development. Phosphorylation of insulin receptor substrate (IRS)-1/2 by IGF-I receptor tyrosine kinase is essential for IGF action. Here we identify Nedd4 as an IRS-2 ubiquitin ligase. Nedd4 monoubiquitinates IRS-2, which promotes its association with Epsin1, a ubiquitin-binding protein. Nedd4 recruits IRS-2 to the membrane, probably through promoting Epsin1 binding, and enhances IGF-I receptor-induced IRS-2 tyrosine phosphorylation. In thyroid FRTL-5 cells, activation of the cyclic AMP pathway increases the association of Nedd4 with IRS-2, thereby enhancing IRS-2-mediated signalling and cell proliferation induced by IGF-I. The Nedd4 and IRS-2 association is also required for maximal activation of IGF-I signalling and cell proliferation in prostate cancer PC-3 cells. Nedd4 overexpression accelerates zebrafish embryonic growth through IRS-2 in vivo. We conclude that Nedd4-induced monoubiquitination of IRS-2 enhances IGF signalling and mitogenic activity.