Insulin resistance at the target cell is common in non-insulin dependent diabetes mellitus of the elderly. We have been investigating novel ways to identify and characterize a putative insulin receptor phosphatase in an attempt to understand how this phosphatase activity can be regulated in vivo as a target for treatment. We have demonstrated that our recently introduced permeabilized cell model offers unique opportunities to investigate the intimate regulation of insulin receptor phosphorylation and dephosphorylation by closely- associated membrane-bound protein tyrosine phosphatase(s). It is suggested that compartmentalization within the cell and interactions with other putative regulatory proteins are maintained. Furthermore, this system has allowed the study of the activity of normal and mutant insulin receptor. and the effect of synthetic peptides on the extent and pattern of receptor phosphorylation.