The hydrolysis of 3H-retinyl ester was examined in the retinal pigment epithelium (RPE) and neural retina of cattle eyes and compared to that in homogenates of rat liver. The optimum pH for hydrolysis was 4.0-4.5 for RPE and 7.5-8.0 for liver. The RPE activity, which shows no variability between individual animals, is localized mainly in the lysosomal fraction of the cell. It is strongly inhibited by bile salts at concentrations as low as 0.2-0.5% and conversely, is strongly activated by Triton X-100, with maximum stimulation found at a concentration of approximately 1%. The apparent Vmax for hydrolysis of labeled retinyl ester in the RPE is 2.7 nmoles/hr/mg protein, a value approximately 1/150 to 1/200 of the rate of retinol esterification in these cells. Little or no hydrolytic activity could be detected in neural retina or in rod outer segments. Studies on the specificity of the RPE retinyl ester hydrolase activity revealed unexpectedly high hydrolytic activity toward both cholesteryl oleate and triolein, approximately 20 and 5 times greater, respectively, than in rat liver. The hydrolytic activity for cholesteryl oleate in the RPE was mainly at pH 3.5, while that for triolein showed three pH maxima, one at pH 4.5-5.0, a second near neutral pH and the third at pH 8. These findings reflect an active and complex pattern of fatty acyl ester lipid-metabolizing enzymes in cattle RPE whose interrelationships to one another require further clarification.