Proposed mechanisms by which insulin exerts its effects are discussed. Evidence for a role for the tyrosine kinase activity of the insulin receptor and of a phosphorylation/dephosphorylation cascade is presented. The possible roles of phospholipid breakdown, diacylglycerol, and protein kinase C are discussed. The hypothesis that insulin elicits the hydrolysis of a glycosyl phosphatidylinositol to form a mediator of certain of its actions is considered in detail. The evidence that a G protein is involved in insulin action is analyzed.