We have assessed the influence of nondisplaceable (internalized) insulin and insulin degradation during binding reactions at 37 degrees C on the numbers and affinities of insulin binding sites on isolated rat adipocytes. Corrections for nondisplaceable insulin caused a 33% reduction in the number of the high affinity sites (p less than 0.01) and a 24% reduction (p less than 0.01) in the number of the low affinity sites which was associated with a 20% increase (p less than 0.01) in affinity when a two-site model was applied. With a one-site model, the number of insulin receptors decreased by approximately 33% (p less than 0.01), but the affinity did not change. These results indicate that the internalization and degradation of insulin that occurs during the binding reaction can significantly affect the estimation of insulin binding kinetics. Potential variations in internalization and degradation of insulin by cells obtained under various physiological or pathologic conditions should, therefore, be taken into consideration in the interpretation of insulin binding data.