Isolated rat adipocytes were incubated with 125I-labeled insulin (about 100 pmoles/liter) at 37 degrees C, pH 7.4, and the label associated with the cells was measured by a modified oil-flotation method. The binding of tracer alone was at least 10 times higher than the binding in the presence of insulin (1 mumole/liter.) Under conditions with low rates of insulin degradation (4% per hour or less) the amount of label associated with the cells was constant from 40--180 min and about 80% of the label was extracted (acetic acid 3 moles/liter, urea 6 moles/liter) as iodoinsulin as judged by gel filtration followed by titration with antiinsulin antibody. The remaining 20% coeluted with iodotyrosine. At steady state about half of the label dissociated from the cells as iodoinsulin and about half as iodotyrosine, as judged by gel filtration and paper chromatography in two solvent systems. The degradation of receptor-bound insulin was independent of the receptor occupancy. "Nonspecifically" bound labeled insulin (ie, in the presence of unlabeled insulin 1 mumole/liter) was not degraded. It is concluded that receptor-bound insulin is a substrate for degradation in adipocytes and about half of the molecules are degraded at 37 degrees, pH 7.4. The only identified labeled degradation product is iodotyrosine and the pool size within the cell seems to be about 20%.