(125)I-labelled asialo-fetuin, administered intravenously, rapidly accumulates in rat liver and the radioactivity is subsequently cleared from the liver within 60min. Plasma radioactivity reaches a minimum between 10 and 15 min after injection and rises slightly during the period of liver clearance. Free iodide is the only radioactive compound found in plasma during this latter period. Fractionation of rat liver at 5 and 13min after injection of (125)I-labelled asialo-fetuin supports the hypothesis that asialo-glycoprotein is taken into liver by pinocytosis after binding to the plasma membrane and is then hydrolysed by lysosomal enzymes. At 5min, radioactivity was concentrated 23-fold in a membrane fraction similarly enriched in phosphodiesterase I, a plasma-membrane marker enzyme, whereas at 13min the radioactivity appeared to be localized within lysosomes. Separation of three liver fractions (heavy mitochondrial, light mitochondrial and microsomal) on sucrose gradients revealed the presence of two populations of radioactive particles. One population banded in a region coincident with a lysosomal marker enzyme. The other, more abundant, population of radioactive particles had a density of 1.13 and contained some phosphodiesterase, but very little lysosomal enzyme. These latter particles appear to be pinocytotic vesicles produced after uptake of the asialo-fetuin bound by the plasma membrane. Lysosomal extracts extensively hydrolyse asialo-fetuin during incubation in vitro at pH4.7 and iodotyrosine is completely released from the iodinated glycoprotein. Protein digestion within lysosomes was demonstrated by incubating intact lysosomes containing (125)I-labelled asialo-fetuin in iso-osmotic sucrose, pH7.2. The radioactive hydrolysis product, iodotyrosine, readily passed through the lysosomal membrane and was found in the external medium. These results are not sufficient to account for the presence of free iodide in plasma, but this was explained by the observation that iodotyrosines are deiodinated by microsomal enzymes in the presence of NADPH.