Insulin influences certain metabolic and transport renal functions and is avidly degraded by the kidney, but the relative contribution of the luminal and basolateral tubular membranes to these events remains controversial. We studied (125)I-insulin degradation [TCA and immunoprecipitation (IP) methods] and the specific binding of the hormone by purified luminal (L) and basolateral (BL) tubular membranes. These were prepared from rabbit kidney cortical homogenates by differential and gradient centrifugation and ionic precipitation steps in sequence, which resulted in enrichment vs. homogenate of marker enzymes' activities (sodium-potassium-activated adenosine triphosphatase for BL and maltase for L) of 8- and 12-fold, respectively. Both fractions degraded insulin avidly and bound the hormone specifically without saturation even at pharmacologic concentrations (10 muM). At physiologic insulin concentrations (0.157 nM) BL membranes degraded substantial amounts of insulin (44.2+/-2.6 and 40.7+/-2.2 pg/mg protein per min by the TCA and IP methods, respectively), even though at lesser rates (P < 0.001) than the luminal fraction (67.2+/-2.3 and 75+/-6.2 pg/mg protein per min, respectively); the rate of insulin catabolism by BL membranes was significantly higher (P < 0.001) than that which could be attributed to their contamination by luminal components [12.2+/-1.9 pg/mg per min (TCA method), or 13.7+/-1.9 pg/mg per min (IP method)]. Competition experiments suggested that insulin-degrading activity in both fractions includes both specific and nonspecific components. In contrast to degradation, insulin binding by both membranes was highly specific for native insulin and was severalfold higher in BL than L membranes [17.5+/-1.3 vs. 4.5+/-0.4 fmol/mg protein (P < 0.001) at physiologic insulin concentrations]. Despite the marked difference in the binding capacity for insulin by the two membranes, the patterns of labeled insulin displacement by increasing amounts of unlabeled hormone were superimposable (50% displacement required approximately 3 nM), suggesting that their receptors' affinity for insulin was similar. These observations provide direct evidence that interaction of insulin with the kidney involves binding and degradation of the hormone at the peritubular cell membrane.