To examine the role of intramolecular beta subunit trans- and cis-autophosphorylation in signal transduction, the vaccinia virus/bacteriophage T7 expression system was used to generate insulin holoreceptors composed of a kinase-defective half-receptor precursor (alphabeta(A/K) or alphabeta(A/K.DELTACT)) and a kinase-active half-receptor precursor (alphabeta(DELTACT) or alphabeta(WT)). In the alphabeta(A/K-alphabeta(DELTACT) hybrid insulin receptor, insulin stimulated a 20-fold increase in intramolecular beta subunit trans-phosphorylation, whereas cis-phosphorylation increased only 3-fold over the basal state. Similarly, in the alphabeta(WT)-alphabeta(A/K.DELTACT) hybrid insulin receptor, insulin stimulated trans-phosphorylation approximately 30-fold and cis-phosphorylation only 3-fold over the basal state. Although cis-phosphorylation of the kinase-functional alphabeta half-receptor was observed within these hybrid receptor species, this was not sufficient to stimulate exogenous substrate kinase activity. These data demonstrate that insulin primarily activates an intramolecular beta subunit trans-phosphorylation reaction within the insulin holoreceptor and suggest that this reaction is necessary for activation of the holoreceptor. Furthermore, our results suggest a molecular basis for the dominant-negative phenotype observed in insulin-resistant patients possessing one kinase-defective insulin receptor allele.