The functional role of the oligosaccharide chains linked to the insulin receptor (IR) beta subunit was investigated by site-directed mutagenesis of each of the 4 acceptor asparagines (N1 to N4 from the amino to the carboxyl terminus) and stable expression of the receptors in CHO cells. All mutant receptors are expressed normally at the cell surface, bind insulin with similar affinity, but have a beta subunit of smaller molecular mass, and a defect in ligand-induced internalization as compared to wild type receptor. In terms of receptor activation and signal transduction, the N1 and N2 mutants function normally, whereas the N4 mutant exhibits major alterations in in vitro tyrosine kinase activity and autophosphorylation and is unable to transduce the signal for either glycogen or DNA synthesis. By contrast, in vivo autophosphorylation and IRS-1 phosphorylation appear quantitatively normal, and only partial alterations of phosphatidylinositol 3-kinase and mitogen-activated protein kinase activation are observed. Mutation of the N3 site results in partial defect of IR activation. These data provide evidence for (i) glycosylation of each N-linked glycosylation site of the IR beta subunit, (ii) absence of correlation between internalization and transmembrane signaling, and (iii) a major role for oligosaccharide side chain(s) located close to the cell membrane in IR activation and transmembrane signaling.