The interaction of insulin with its receptor was studied in microsomes from livers of transgenic mice expressing the bovine growth hormone gene with mouse metallothionein-1 promoter (MT/bGH) and in their normal (non-transgenic) littermates. Specific binding of 125I-insulin was detected in hepatic microsomes from normal and transgenic mice with an apparent Kd of 8 and 200 nM, for high and low affinity sites, respectively. The transgenic MT/bGH mice had a marked hyperinsulinism without significant elevation of plasma glucose levels. Under identical conditions of preparation and incubation, microsomes from the transgenic male and female mice bound 39% and 34% less insulin than those from their litter mates. Scatchard's analysis indicates that this decrease in binding is due to a decrease in the number of receptor sites. In contrast to the marked decrease in insulin binding to unmasked receptors, the levels of masked (also called cryptic) insulin receptors were similar (or slightly increased) in transgenic mice microsomes as compared to those of their normal litter mates.