Ligand-activated insulin receptor (IR) attracts and phosphorylates various substrates such as insulin receptor substrates 1-4 (IRS) and Shc. To investigate how binding affinity for substrate affects signalling we generated chimeric receptors with the beta-chain of the insulin receptor containing NPXY motives with different affinities for receptor substrates. We found that the extent of receptor tyrosine phosphorylation positively correlates with binding affinity towards IRS1/2 but not towards Shc. Moreover, overexpression of IRS1 or IRS2 but not of Shc increased IR tyrosine phosphorylation in a dose-dependent manner, also independent of insulin. Molecular truncations of IRS1 revealed that neither the isolated PH and PTB domains nor the C-terminus with the tyrosine phosphorylation sites alone are sufficient for substrate-dependent receptor activation. Overexpression of IRS1 and IRS2 impaired insulin-induced internalization of the IR in a dose-dependent manner suggesting that IRS proteins prevent endosome-associated receptor dephosphorylation/inactivation. IRS1 and IRS2 could therefore target the activated IR to different cellular compartments. Overexpression of IRS1 and IRS2 inhibited insulin-stimulated activation of the MAP kinases Erk1/2 while it increased/induced activation of Akt/PKB. Finally, overexpression of IRS1 and IRS2 but not of Shc induced DNA synthesis in starved CHO-IR cells independent of exogenous growth factors. Our results demonstrate that variations in cellular IRS1 and IRS2 concentration affect insulin signalling both upstream and downstream and that IRS proteins could play instructive rather than just permissive roles in signal transmission.