Insulin receptors derived from highly purified rat liver plasma membranes and Golgi membranes showed differences in insulin-mediated receptor autophosphorylation, even though their insulin-binding characteristics were similar. This difference was related to the generation of a Mr-84,000 fragment of the Mr-90,000 beta subunit of the plasma-membrane receptor, a fragment that was not present in the receptor from Golgi membranes, in the absence of a change in the insulin-binding alpha subunit. When autophosphorylation activity was based on insulin binding, the activity of the plasma-membrane-derived insulin receptor was decreased to 25-30% that of the Golgi-derived receptor. Endoglycosidase F digestion produced changes in the Mr values for both species, but they were not converted into a single subunit, thereby suggesting differences in the protein component of the two subunits. Although the proteinase inhibitors phenylmethanesulphonyl fluoride, ovomucoid and aprotinin failed to block the formation of the Mr-84,000 fragment, the presence of iodoacetamide or EDTA during liver homogenization markedly inhibited fragment generation and allowed the plasma-membrane insulin receptor to retain an autophosphorylation activity comparable with that present in insulin receptors from Golgi membranes. Thus a thiol-sensitive, cation-dependent, degrading activity has been identified that can uncouple the insulin-binding activity of the plasma-membrane insulin receptor from its tyrosine kinase activity.