Phosphorylation and dephosphorylation of the insulin receptor were examined in permeabilized rat adipocytes using pulse-chase techniques. Maximum insulin-dependent phosphorylation during a 2-min labeling period with 75 microM [gamma-32P]ATP was attained at 10(-6)-10(-7) M insulin with a small effect at 10(-9) M. The reaction utilized either Mn2+ or Mg2+, but insulin-dependent phosphorylation was 11-fold greater with Mn2+. In the absence of insulin, phosphorylation was 6-fold greater with Mn2+. With either cation, insulin (10(-7) M) was a potent stimulator of receptor phosphorylation with 5- and 8-fold increases above control levels in the presence of Mg2+ and Mn2+, respectively. Phosphorylation of the insulin receptor reached an apparent steady state within 30 s at 37 degrees C under all conditions. By phosphoamino acid analysis, all insulin- and Mn2+-dependent phosphorylation in the 95-kDa subunit of the insulin receptor was phosphotyrosine. A small amount of phosphoserine was detected, but it was not affected by either insulin or Mn2+. Dephosphorylation of the insulin receptor was examined by "chasing" labeled ATP after 2 min with a 40-fold excess of unlabeled ATP. Maximum dephosphorylation was reached in 2 min under all conditions. Insulin had no effect on the dephosphorylation reaction. The labile fraction of Mn2+-dependent phosphoreceptor dephosphorylated to one-half of its initial level in approximately 21 s at 37 degrees C. Vanadate, a potent phosphotyrosine phosphatase inhibitor, inhibited dephosphorylation of this phosphoreceptor by 25%. When vanadate was present during the 2-min labeling period, phosphorylation of control, and insulin-dependent receptor was increased by 50%. In summary, rapid "in vitro" autophosphorylation of the insulin receptor is coupled to an equally rapid dephosphorylation reaction in permeabilized adipocytes. This suggests that phosphorylation of the insulin receptor is a dynamic, rapidly reversible, insulin-dependent response in target cells and is consistent with it being involved in insulin signal transduction and insulin action.