Native insulin inhibits the binding and degradation of ¹²⁵I-labelled insulin in parallel. Half-maximal inhibition of degradation occurs with 10nm-insulin, a hormone concentration sufficient to saturate the insulin receptor. The proportion of bound hormone that is degraded increases as the insulin concentration is increased, suggesting that low-affinity uptake is functionally related to degradation. Since only a small fraction (approx. 10%) of the overall degradation occurs at the plasma membrane, or in the extracellular medium, translocation of bound hormone into the cell is the predominant mechanism mediating the degradation of insulin. In the presence of 0.6nm-insulin, a concentration at which most cell-associated hormone is receptor-bound, chloroquine increases the amount of ¹²⁵I-labelled insulin retained by hepatocytes. However, chloroquine increases the retention of degradation products of insulin in incubations containing sufficient hormone (6nm) to saturate the receptor and permit occupancy of low-affinity sites. Glucagon does not compete for the interaction of ¹²⁵I-labelled insulin (1nm) with the insulin receptor. In contrast, 20μm-glucagon inhibits 75% of the uptake of insulin (0.1μm) by low-affinity sites. A fraction of the cell-bound radioactivity is not intact insulin throughout a 90min association reaction at 37°C. During dissociation, fragments of ¹²⁵I-labelled insulin are released to the medium more rapidly than is intact hormone. The production and transient retention of degradation products of the hormone complicates the characterization of the insulin receptor by equilibrium or kinetic methods of assay. It is proposed that insulin degradation occurs by receptor- and non-receptor-mediated pathways. The latter may be related to the action of glutathione–insulin transhydrogenase, with which both insulin and glucagon interact.