The oxidative folding of human insulin-like growth factor (IGF)-I yields two major disulphide folding isomers. In the present study, B-domain analogues of IGF-I were used to investigate the effect of mutations on the folding reaction and to investigate the functional implications of misfolding. The analogues used were substitutions of the native Glu3 by Gly or Arg, or the native Glu9 by Lys. IGF-I and these analogues were also prepared attached to a hydrophobic 13-amino-acid N-terminal extension, Met-Phe-Pro-Ala-Met-Pro-Leu-Ser-Ser-Leu-Phe-Val-Asn, referred to as 'Long-IGF-I' analogues. Each IGF was fully reduced and refolded to yield native and misfolded isomers, which were subsequently purified for biological characterization. Analysis of the folding reaction at equilibrium revealed a distribution of folding isomers characteristic for each peptide. The yield of the native disulphide folding isomer was increased for the Glu3 substitutions, but not for the Glu9 substitution. The main alternative folding isomer was present in the IGF-I analogues in reduced proportions. Except for [Gly3]IGF-I the N-terminal extension increased the yield of the native isomer which was maximal for the analogue Long-[Arg3]IGF-I. A folding intermediate for the latter analogue was isolated and partially characterized. The biological assays showed that all the main alternative isomers bound poorly to IGF-binding proteins (IGFBPs) secreted by L6 myoblasts. Moreover, these isomers bound to the type 1 IGF receptor with 0.5-25% the affinity of the native isomer. In a rat L6 myoblast protein-synthesis assay, the observed biological activity of the native and main alternative isomers was explained by their modified IGFBP- and receptor-binding properties. We propose that the N-terminal extension imparts a steric constraint at a crucial point in folding, thus allowing native disulphide bonds to form efficiently.