Here we report the identification of a new mutation in the alpha-chain of the insulin receptor, changing Trp412 into Ser using DNA from consanguineous parents who gave birth to a child with leprechaunism. The mutant receptor was expressed stably in CHO and transiently in COS-1 cells. It was found that the Ser412 mutant is not cleaved into alpha- and beta-subunits and remains as a 210-kDa proreceptor at an intracellular site. This property of the mutant receptor is in line with the observed decreased insulin binding to the parental fibroblasts. Cross-linking experiments show that the Ser412 proreceptor is able to bind insulin with an affinity comparable to that of the wild-type alpha-chain. Despite its capacity to bind insulin, the mutant receptor is not autophosphorylated. We postulate that the patient was homozygous for the Trp412-->Ser mutation and that the mutation was responsible for the leprechaun phenotype. This is the first description of a transport-defective receptor with the mutation outside the tetrabasic processing site and a functional insulin binding domain. The ability of the Ser412 mutant to bind insulin in cross-linking experiments suggests that the impaired transport of the proreceptor to the cell surface is the primary cause for the binding defect to intact cells.