Patients with leprechaunism have hyperinsulinemia and extreme insulin resistance. The mechanism of the insulin resistance has not been delineated. To examine postreceptor events in this unusual syndrome we have assayed the enzyme guanylate cyclase [E.C.4.6.12], which is modulated by insulin, and the concentration of the intracellular messenger cyclic GMP in liver from two children with leprechaunism and extreme insulin resistance. Both patients exhibited down regulation of the red blood cell insulin receptors, but normal insulin receptor binding to Ebstein-Barr transformed IM-9 lymphocytes and monocytes. There was no evidence of antireceptor or antiinsulin antibodies. Activity of liver guanylate cyclase expressed as pmol/mg protein/10 min incubation in the soluble and paniculate fractions were, respectively, Ark-1 133 ± 18, 25 ± 6; Ark-2 129 ± 17, 23 ± 8; control children (six average) 287 ± 16, 55 ± 9. The concentration of cyclic GMP was also 50% lower (0.08 ± 0.03 in Ark-1 and 0.07 ± 0.04 in Ark-2), compared to 0.19 ± 0.07 pmol/mg protein/min in the control livers. There was no change in adenylate cyclase activity in children with leprechaunism versus the control children. These data suggest an abnormality of a postreceptor event in this rare genetic disease. These data, however, do not rule out that in some cases of leprechaunism a receptor binding abnormality may be the primary defect. We speculate that a defect in insulin action distal to plasma membrane receptor binding may be etiological in this unusual syndrome.