Purified human placental insulin receptors were incorporated into small unilamellar phospholipid vesicles by the addition of n-octyl beta-glucopyranoside solubilized phospholipids, followed by removal of the detergent on a Sephadex G-50 gel filtration column and extensive dialysis. The vesicles have an average diameter of 142 +/- 24 nm by Sephacryl S-1000 gel filtration chromatography and 119 +/- 20 nm by transmission electron microscopy. These vesicles are impermeant to small molecules as indicated by their ability to retain [gamma-32P]ATP, which could be released by the addition of 0.05% Triton X-100. Detergent permeabilization or freeze-thawing of the insulin receptor containing vesicles in the presence of 125I-insulin indicated that approximately 75% of the insulin binding sites were oriented right side out (extravesicularly). Sucrose gradient centrifugation of insulin receptors incorporated at various protein to phospholipid mole ratios demonstrated that the insulin receptors were inserted into the phospholipid bilayer structure in a concentration-dependent manner. Addition of [gamma-32P]ATP to the insulin receptor containing vesicles was relatively ineffective in promoting the autophosphorylation of the beta subunit in the absence or presence of insulin. Permeabilization of the vesicles with low detergent concentrations, however, stimulated the beta-subunit autophosphorylation approximately 2-fold in the absence and 10-fold in the presence of insulin. Insulin-stimulated beta-subunit autophosphorylation was also observed under conditions such that 94% of those vesicles containing insulin receptors had a single receptor per vesicle, suggesting that the initial beta-subunit autophosphorylating activity is intramolecular. Phospho amino acid analysis of the vesicle-incorporated insulin receptors demonstrated that the basal and insulin-stimulated beta-subunit autophosphorylation occurs exclusively on tyrosine residues. It is concluded that when purified insulin receptors are incorporated into a phospholipid bilayer, they insert into the vesicles primarily in the same orientation as occurs in the plasma membrane of intact cells and retain insulin binding as well as insulin-stimulated beta-subunit autophosphorylating activities.