Leprechaunism features a clinical constellation characterized by extreme insulin resistance, growth retardation, and several distinct developmental abnormalities. One puzzling observation about leprechaunism is that mutations in the insulin receptor gene frequently associated with this syndrome cannot account for the aberrant responses of cultured cells to other growth factors. Here we report that the generation of reactive oxygen species (ROS) is impaired in cells from leprechaunism patients, thus shedding new light on this issue. Stimulation of patients' skin fibroblast cells with platelet-derived growth factor (PDGF) resulted in a lower-level tyrosine phosphorylation of cytosolic proteins compared with that seen in normal cells. In addition, consistent with the hypothesis that ROS mediate the level of tyrosine phosphorylation of cytosolic proteins through inactivation of protein tyrosine phosphatases (PTPases), patient fibroblast cells showed a significantly higher phosphatase activity than normal cells. We further showed that the lower-level tyrosine phosphorylation in response to growth factors results from the downregulation of an NADPH oxidase, Nox4, which in turn results in the reduction of ROS generation. Ectopic expression of Nox4 in the patient fibroblast cells consistently restored PDGF-induced ROS production and regulation of PTPase activities. Taken together, these data provide insight into the mechanisms through which growth retardation is associated with leprechaunism syndrome.