A dwarf transgenic mouse (Dtm) line has been established in which mice express relatively high levels of a mutated bovine (b) Gh gene. This bgh analog binds to mouse liver membrane preparations with an affinity similar to that of wild-type bgh. The mean growth ratio of these mice is approximately 0.7 relative to that of their nontransgenic littermates. Serum insulin-like growth factor-I (Igf-I) levels of Dtm were found to be approximately half those in nontransgenic litter-mates. Liver Gh receptor levels were up-regulated in Dtm or wild-type bgh transgenic mice. Pituitary Gh levels were negatively correlated with serum Igf-I concentrations. Wild-type bgh transgenic mice contain relatively high serum Igf-I and low pituitary Gh levels, whereas Dtm possess low serum Igf-I and high pituitary Gh levels. The decrease in serum Igf-I resulting from the interaction between the bgh analog, the endogenous mouse Gh, and Gh receptor(s) apparently leads to a dwarf phenotype. These data suggest that this bgh analog has uncoupled Gh ligand-receptor binding from Igf-I production and acts as a functional antagonist to the action of endogenous mgh.