The site of apolipoprotein B (apoB) degradation was investigated in cultured rat hepatocytes. Brefeldin A plus nocodazole completely blocked apoB degradation suggesting the involvement of a post-endoplasmic reticulum (ER) compartment. Monensin inhibited apoB degradation by 40% implying that a post-Golgi compartment could be involved in degradation of apoB. Ammonium chloride or chloroquine inhibited partially the degradation of apoB100 and apoB48, indicating some degradation in lysosomes, or in an acidic compartment such as trans-Golgi or endosomes. The degradations of apoB100 and apoB48 were blocked completely by (2S,3S)-trans-epoxysuccinyl-L-leucylamido-3-methylbutane ethyl ester (EST) during a chase of 90 min demonstrating that a cysteine protease was responsible for apoB degradation. Chymostatin, leupeptin, pepstatin, phenylmethylsulfonyl fluoride, and aprotinin had no significant effect on the degradation of apoB48. However, leupeptin and pepstatin decreased the degradation of apoB100 by 20-30%. Degradation of apoB100 and apoB48 occurred in isolated Golgi fractions with little degradation in heavy or light ER. Degradation of apoB in Golgi fractions was inhibited by EST and by preincubating hepatocytes with 10 nM dexamethasone. Immunofluorescent microscopy revealed that apoB accumulated in the Golgi region after EST treatment. It is concluded that a major part of apoB degradation in rat hepatocytes occurs in a post-ER compartment via the action of a cysteine protease that is regulated by glucocorticoids.