The Daudi line of human lymphoblastoid cells requires insulin and transferrin for growth in serum-free medium and is highly sensitive to the inhibitory effect of human leukocyte interferon (IFN-alpha) on cell proliferation. A variant subline of Daudi cells, which is resistant to the antiproliferative action of IFN-alpha, also has been grown in serum-free medium containing insulin and transferrin. The proliferation of IFN-sensitive and -resistant Daudi cells is dependent on the occupancy of insulin receptors, with optimal cell proliferation observed at high receptor occupancy (nearly 100%). No evidence was found for receptors for insulin-like growth factor I on Daudi cells. IFN treatment of IFN-sensitive cells decreased the capacity of the cells to bind 125I-insulin. The altered binding capacity was due to diminished specific, lower affinity insulin binding, as detected at high 125I-insulin concentrations. Higher affinity insulin binding was not altered by IFN. Insulin binding was also reduced in detergent-solubilized extracts from IFN-treated sensitive Daudi cells and the magnitude of the effect was comparable to that observed in intact cells. This indicates that the total number of insulin binding sites (surface + internal) is decreased in IFN-treated sensitive cells. Insulin binding to IFN-sensitive cells decreased linearly with time between 6 and 48 h from the addition of IFN. The effect on lower affinity insulin binding developed more rapidly than the inhibitory effect of IFN on cell proliferation. The insulin-binding capacity of Daudi cells resistant to the antiproliferative effect of IFN was unaffected by IFN, despite the fact that these cells contain as many cell surface IFN receptors as sensitive cells. These observations raise the possibility that lower affinity insulin binding is important in the growth-promoting actions of insulin.