Chymotrypsin substrate analogues, such as N-acetyl-Tyr ethyl ester, have recently been demonstrated to inhibit the endocytic uptake of insulin in isolated rat adipocytes. In this study, the effects of N-acetyl-Tyr ethyl ester on cell surface insulin binding and dissociation were examined. Surface-bound 125I-insulin was distinguished from intracellular 125I-insulin by the sensitivity of the former to rapid dissociation with an acidic buffer (pH 3.0). Plateau levels of surface-bound insulin at 37 degrees C were increased 70% by inhibiting the internalization pathway. This increase was temperature and insulin concentration dependent. Thus differences in surface binding were small at 12 degrees C and also at high (100-200 ng/ml) insulin concentrations. Inhibition of internalization with N-acetyl-Tyr ethyl ester markedly slowed the loss of surface-bound insulin observed during dissociation studies. After 20-30 min of dissociation, the remaining levels of surface-bound insulin were three- to fourfold higher in treated adipocytes compared with control adipocytes. Added unlabeled insulin retained its ability to accelerate the dissociation of insulin in N-acetyl-Tyr ethyl ester-treated cells. These observations indicate that the internalization pathway is a quantitatively important factor in determining levels of surface binding at 37 degrees C and in determining the rate of deactivation of insulin binding.