SummaryContext  Mutations of the insulin receptor gene (INSR) can cause genetic syndromes associated with severe insulin resistance.Objectives  We aimed to analyse INSR mutations in Saudi patients with severe insulin resistance.Design  Ten patients with Type A insulin resistance syndrome from five unrelated Saudi families were investigated. The entire coding region of INSR was sequenced. The founder effect was assessed by microsatellite haplotype analysis. The functional effect of the mutation was investigated by in vitro functional assays.Results  A novel biallelic c.433 C>T (p.R118C) mutation was detected in all patients. The c.433 C>T (p.R118C) sequence variation was not found in 100 population controls. The arginine residue at position 118 is located in the ligand‐binding domain of INSR and is highly conserved across species. Microsatellite haplotype analysis of these patients indicated that p.R118C was a founder mutation created approximately 2900 years ago. The wild‐type and mutant R118C INSR were cloned and expressed in CHO cells for functional analysis. Specific insulin binding to the mutant receptor was reduced by 83% as compared to wild‐type (WT), although the mutant receptor was processed and expressed on the cell surface. Insulin‐mediated receptor autophosphorylation was also significantly reduced in CHOR118C cells.Conclusions  Biallelic c.433 C>T (p.R118C) mutation of INSR causes significant damage to insulin binding and insulin‐mediated signal transduction. p.R118C is a founder mutation frequently present in the Saudi patients with severe insulin resistance.