The intracellular movement, following uptake of 125I-labelled denatured serum albumin into nonparenchymal liver cells, was followed by means of subcellular fractionation. Isolated nonparenchymal rat liver cells were prepared by means of differential centrifugation. The cells were homogenized in a sonifier and the cytoplasmic extract subjected to isopycnic centrifugation in a sucrose gradient. The intracellular movement of the labelled albumin was followed by comparing the distribution profile of radioactivity in the sucrose gradient with those of marker enzymes for plasma membrane and lysosomes. The distribution profiles for radioactivity after the cells had been exposed to the labelled denatured albumin for different time periods indicated that the radioactivity was first associated with subcellular fractions of lower modal densities than the lysosomes. With time of incubation the radioactivity moved towards higher densities. After prolonged incubations in the absence of extracellular labelled denatured albumin the radioactivity peak coincided with that of the lysosomal marker beta-acetylglucosaminidase. When the cells were treated with the lysosomal inhibitor leupeptin, degradation of the labelled albumin was decreased, resulting in a massive intracellular accumulation of radioactivity. The radioactivity peak coincided with the peak of activity for the lysosomal marker beta-acetylglucosaminidase, suggesting lysosomal degradation.