Tissue-specific alternative splicing of exon 11 of the insulin receptor gene results in 2 mRNAs that differ by 36 nucleotides within the coding region. The 2 transcripts encode 2 protein isoforms with (Ex11+) or without (Ex11-) 12 additional amino acids at the carboxy-terminus of the receptor alpha-subunit. Previous studies of the 2 isoforms of the human insulin receptor expressed in mammalian cell transfectants have revealed small functional differences at the levels of equilibrium insulin binding affinity and acute ligand-induced receptor internalization. In the present study, we determined the biochemical basis for differential insulin binding affinity. Further functional characterization of the 2 receptor isoforms was also performed. The results obtained were as follows. 1) Studies of ligand association demonstrated a faster (1.8-fold) "on rate" for Ex11- receptors than for Ex11+ receptors, as determined by the kinetics of [125I]insulin binding to transfected cells. In addition, dissociation of prebound [125I]insulin from Ex11- receptors was characterized by an accelerated "off rate" relative to that of Ex11+ receptors. 2) Using both intact Chinese hamster ovary (CHO) cells and partially purified solubilized insulin receptors, the ability of insulin-like growth factor-I to compete for [125I]insulin binding to either isoform differed markedly. The mean IC50 for Ex11- was 40 nM vs. 350 nM for Ex11+. 3) Both Ex11- and Ex11+ receptors were equally capable of hybrid formation with endogenous CHO cell insulin-like growth factor-I receptors. 4) The relative abilities of 2 inhibitory polyclonal antiinsulin receptor antisera to displace [125I]insulin binding did not differ between the two isoforms. 5) Studies of insulin-induced (300 nM) receptor down-regulation in CHO cell transfectants suggested preferential down-regulation of Ex11- receptors; however, no down-regulation difference was observed when Rat 1 cell transfectants expressing the two splice variants were studied. These findings further support the idea that the 2 isoforms of the insulin receptor are functionally distinct in important ways.