1. Isolated rat fat cells were incubated at 37 degrees with [U-14C]-glucose 0.55 mM and 125I-labeled insulin. The amount of receptor-bound 125I-labeled insulin and the rate of insulin-induced 14C-lipid synthesis were assessed during association and dissociation of 125I-labeled insulin. 2. The rate of 14C-lipid synthesis was constant from zero time in the absence of insulin and in the presence of insulin in a high concentration (0.7 muM). With insulin in a low concentration (56 pM) the insulin-induced rate of 14C-lipid synthesis was proportional to the receptor occupancy; the receptor binding reached equilibrium and the rate of 14C-lipid synthesis reached a constant value after 30 to 45 min. With insulin in a concentration of 0.7 nM the rate of 14C-lipid synthesis reached a steady state before equilibrium of the receptor binding was obtained. 3. Ater preincubation with 56 pM 125I-labeled insulin followed by removal of extracellular insulin the decrease in the rate of insulin induced 14C-lipid synthesis followed the decrease in receptor occupancy with a half-time of about 10 min. After preincubation with insulin in concentrations of 0.28, 0.56, and 1.4 nM a maximum rate of 14C-lipid synthesis was maintained for about 8, 15, and 30 min, respectively. 4. The following model is suggested. Binding of insulin to the previously described receptors with a dissociation constant of about 3 nM (Gammeltoft, S., and Gliemann, J. (1973) Biochim. Biophys Acta 320, 16-32) represents the first step in the action of insulin on lipid synthesis from glucose. The receptor occupancy is rate-determining at low concentrations of insulin, i.e. when the occupancy is small (about 2 percent or less). At higher insulin concentrations some other step becomes rate-determining and the higher occupancy at equilibrium therefore causes no further increase in the steady state lipogenesis. However, a high receptor occupancy causes a prolonged maintenance of a maximal (or near-maximal) effect after removal of insulin from the medium.