Insulin receptor substrate (IRS) proteins are phosphorylated by multiple tyrosine kinases, including the insulin receptor. Phosphorylated IRS proteins bind to SH2 domain-containing proteins, thereby triggering downstream signaling pathways. The Drosophila insulin receptor (dIR) C-terminal extension contains potential binding sites for signaling molecules, suggesting that dIR might not require an IRS protein to accomplish its signaling functions. However, we obtained a cDNA encoding Drosophila IRS (dIRS), and we demonstrated expression of dIRS in a Drosophila cell line. Like mammalian IRS proteins, the N-terminal portion of dIRS contains a pleckstrin homology domain and a phosphotyrosine binding domain that binds to phosphotyrosine residues in both human and Drosophila insulin receptors. When coexpressed with dIRS in COS-7 cells, a chimeric receptor (the extracellular domain of human IR fused to the cytoplasmic domain of dIR) mediated insulin-stimulated tyrosine phosphorylation of dIRS. Mutating the juxtamembrane NPXY motif markedly reduced the ability of the receptor to phosphorylate dIRS. In contrast, the NPXY motifs in the C-terminal extension of dIR were required for stable association with dIRS. Coimmunoprecipitationexperimentsdemonstratedinsulindependent binding of dIRS to phosphatidylinositol 3-kinase and SHP2. However, we did not detect interactions with Grb2, SHC, or phospholipase C-␥. Taken together with published genetic studies, these biochemical data support the hypothesis that dIRS functions directly downstream from the insulin receptor in Drosophila.