The insulin receptor is a transmembrane protein of the plasma membrane, where it recognizes extracellular insulin and transmits signals into the cellular signaling network. We report that insulin receptors are localized and signal in caveolae microdomains of adipocyte plasma membrane. Immunogold electron microscopy and immunofluorescence microscopy show that insulin receptors are restricted to caveolae and are colocalized with caveolin over the plasma membrane. Insulin receptor was enriched in a caveolae-enriched fraction of plasma membrane. By extraction with beta-cyclodextrin or destruction with cholesterol oxidase, cholesterol reduction attenuated insulin receptor signaling to protein phosphorylation or glucose transport. Insulin signaling was regained by spontaneous recovery or by exogenous replenishment of cholesterol. beta-Cyclodextrin treatment caused a nearly complete annihilation of caveolae invaginations as examined by electron microscopy. This suggests that the receptor is dependent on the caveolae environment for signaling. Insulin stimulation of cells prior to isolation of caveolae or insulin stimulation of the isolated caveolae fraction increased tyrosine phosphorylation of the insulin receptor in caveolae, demonstrating that insulin receptors in caveolae are functional. Our results indicate that insulin receptors are localized to caveolae in the plasma membrane of adipocytes, are signaling in caveolae, and are dependent on caveolae for signaling.