The in vitro carboxyl methylation-demethylation of exogenous and endogenous proteins was investigated in rapidly proliferating thymocytes. Of all the cell fractions tested protein carboxyl methyltransferase activity was highest in the nucleoplasmic fraction (3.2 pmol/mg per minute with ACTH and 0.8 pmol/mg per minute with endogenous substrates). The only other fraction with significant activity was the cytosol (1.2 pmol/mg per minute with ACTH). The nuclei from thymocytes are extremely large; consequently some 70-80% of protein carboxyl methyltransferase in these cells is of nuclear origin. The cellular concentration of protein carboxyl methyltransferase and methyl acceptor proteins paralleled the development of the thymus. Mature lymphocytes contained about 25% of the activity of immature thymocytes. Failure to accumulate protein methyl esters, either in vitro in in vivo, was most likely due to the presence of a very active protein methylesterase. This rapid turnover of protein methyl esters was manifest by the continuous production of [3H]methanol when soluble fractions were incubated with S-adenosyl-L-[methyl-3H]methionine ([methyl-3H]AdoMet). [3H]Methanol production was enhanced upon the further addition of the particulate fractions, particularly chromatin. The turnover of protein methyl esters was primarily enzymatic, since no [3H]methanol was formed when ACTH was incubated with AdoMet and purified protein carboxyl methyltransferase. Utilizing [3H]methanol formation as an index of the rate of protein methylation-demethylation would yield minimal values, since this compound was oxidized via alcohol dehydrogenase or oxidase in these cells. The majority of the methyl acceptor proteins were located in the nuclei. The rapid methylation-demethylation of these proteins may play some role in development and (or) differentiation.