Interferon-alpha (IFN-alpha)-mediated intracellular signaling is initiated by ligand-induced receptor dimerization, tyrosine phosphorylation of the Tyk2 and Jak1 tyrosine kinases, and subsequent phosphorylation of the Stat1 and Stat2 proteins. The IFN-alpha receptor consists of at least two distinct subunits. One subunit, IFNAR1, has low affinity binding for interferon yet is required for signal transduction. We introduced mutations in the cytoplasmic domain of human IFNAR1 in order to identify residues involved in the mediation of biological responses. We took advantage of the species specificity of the interferon receptors by analyzing human IFN-alpha-induced major histocompatibility complex class I antigen expression in mouse L929 cells stably transfected with mutant human receptors. The membrane proximal 60-amino acids were insufficient to signal a biological response even though within these residues Tyk2 and Stat2 binding sites have been identified. IFN-alpha-induced receptor tyrosine phosphorylation was not critical for signaling because mutation of Tyr residues to Phe did not prevent the biological response to IFN-alpha. The deletion of a 16-amino acid region highly homologous between species created a receptor which signals an enhanced response. Tyrosine dephosphorylation is a component of this enhanced response as mutation of the Tyr residues within this region to Phe resulted in a receptor with increased sensitivity to IFN. The known signaling molecules that interact with IFNAR1 are positive regulators of IFN-alpha function. The presence of this domain in the COOH-terminal region suggests that the receptor may interact with signaling molecules that negatively regulate interferon responses.