We have recently shown that a synthetic tris-sulfotyrosyl dodecapeptide (3S-peptide-I) that corresponds to the major authophosphorylation domain within the insulin receptor beta-subunit potently inhibited protein tyrosine phosphatase (PTPase) activity in vitro (Liotta et al. J Biol Chem 1994, 269: 22996-23001). In the present study, we found that the introduction of a N-stearyl derivative of 3S-peptide-I in cells caused a significant increase in the insulin-stimulated phosphorylation of the insulin receptor, with a maximum effect at 25 mu M. In contrast, ligand-stimulated phosphorylation of epidermal growth factor (EGF) receptor was not affected by the presence of N-stearyl 3S-peptide-I. Furthermore, stearyl-3S-peptide-I at a concentration of 50 muM was capable of stimulating the activity of downstream key signal regulators of insulin action such as phosphatidylinositol 3-kinase and mitogen activated protein kinase by 2-2.5-fold and 1.8-fold, respectively. These data suggest that by inhibiting dephosphorylation of the insulin receptor in intact cells, 3S-peptide-I specifically enhanced insulin signalling.