This study was designed to characterize insulin receptor substrate‐4 (IRS‐4) in isolated rat hepatocytes and to examine its role in liver regeneration. Subcellular fractionation revealed that 85% of IRS‐4 is located at isolated hepatocyte plasma membranes. The distribution of IRS‐4 among intracellular compartments remained unchanged in insulin‐stimulated cells. Two bands corresponding to 145 and 138 kd were observed in immunoblotting experiments. Immunoprecipitation of hepatocyte lysates with a highly specific antibody against IRS‐4 led to an insulin and insulin‐like growth factor 1 (IGF‐1)‐dependent increase in phosphotyrosine residues of the 145‐kd band. IRS‐4 was found to be associated with Src homology 2 (SH2) domain‐containing proteins (phosphatidylinositol 3‐kinase [PI 3‐kinase] and Src homology phosphatase [SHP‐2]) and with protein kinase C ζ (PKC ζ). Insulin and IGF‐1 elicited a rapid and dose‐dependent binding of these 3 proteins to IRS‐4. These data suggest that IRS‐4 is insulin‐/IGF‐1‐activated by phosphorylation and not by translocation, inducing the recruitment of SH2 domain‐containing proteins and PKC ζ to the membrane. To evaluate the possible role of IRS‐4 in liver regeneration, we also examined this system after partial hepatectomy (PH). One day after PH, IRS‐1 expression increased, consistent with a stimulatory role in the regenerative process, whereas it decreased 7 days after liver resection. This drastic IRS‐1 depletion occurred at the expense of increased IRS‐2 and IRS‐4 expression 7 days after PH. In addition, at this period of time after surgery, the in vivo insulin stimulation of remnant rat livers showed an increase in IRS‐4/PI 3‐kinase association. Given that 1 and 7 days after PH isolated hepatocytes responded similarly to insulin in terms of induced cell proliferation, a compensatory role is proposed for IRS‐2/4 induction. In conclusion, IRS‐4 is activated by insulin and IGF‐1‐like IRS‐1 in rat hepatocytes, and the induced expression of IRS‐4 is a compensatory mechanism that plays a role in conditions of liver regeneration.