Insulin receptor (IR)-deficient mice develop severe diabetes mellitus, diabetic ketoacidosis (DKA) and liver steatosis and die within 1 week after birth. We examined in this work whether the metabolic phenotype of IR(−/−) mutants could be improved by transgenic complementation with IR selectively in the liver. We first generated transgenic mice expressing a human DNA complementary to RNA encoding a truncated constitutively activated form of IR (IRδ) under the control of liver-specific phenylalanine hydroxylase (PAH) gene promoter. These mice presented more pronounced fasting hypoglycemia and showed slightly improved glucose tolerance as compared to controls. The transgenic mice were crossed with IR(+/−) mutants to generate IR(−/−) mice carrying the PAH-IRΔ transgene. Although such mutants developed glycosuria, DKA was delayed by more than 1 week and survival was prolonged to 8–20 days in ∼10% of mice. In these partially rescued pups, serum glucose and triglyceride levels were lowered, hepatic glycogen stores were reconstituted and liver steatosis was absent as compared with pups which developed strong DKA and died earlier. Thus, lack of insulin action in the liver is responsible in large part for the metabolic disorders seen in IR(+/−) mice. This study should stimulate interest in therapeutic strategies aimed at improving hepatic function in diabetes.