Extensive structure activity analysis has allowed us to identify specific residues in the glucagon sequence that are responsible for either receptor recognition or signal transduction. For instance, we have demonstrated that aspartic acid 9 and histidine 1 are essential for activation, and that an ionic interaction between the negative carboxylate and the protonated imidazole may contribute to the activation reaction at the molecular level. In the absence of the carboxylic group at position 9, aspartic 21 or aspartic 15 might furnish distal electrostatic effects to maintain partial agonism. Further investigation established that each of the 4 serine residues in the hormone play distinct roles. Serine 8 provides an important determinant of binding. Whereas neither serines 2, 11, nor 16 are required for receptor recognition. We have shown that serine 16 is essential for signal transduction and thus have identified it to be the third residue in glucagon to participate in a putative catalytic triad together with aspartic 9 and histidine 1, in the transduction of the glucagon response. In this work, we utilized insights into the functional significance of particular residues in the peptide appropriated from our structure-function assignments, as the basis of a molecular approach for the design of active-site directed antagonists of glucagon. The importance as well as the accuracy of our findings are confirmed by the synthesis of a series of improved glucagon antagonists based on replacements at positions 1, 9, 11, 16, and 21. The inhibition index, (I/A)50, of our best antagonist des-His1-[Nle9-Ala11-Ala16]glucagon amide, has been improved 10-fold over the previous best glucagon inhibitor.