The Z-fraction has been defined operationally as a ligand-binding (bilirubin sulfobromophthalein) portion of rat hepatic cytosol that elutes in the molecular weight region of 10(4) daltons after gel filtration. Polyacrylamide gel electrophoreses under different conditions, as well as binding stoichiometry, confirm the anticipated heterogeneity of the Z-fraction. Three factors have contributed to the subsequent resolution of the Z-fraction and partial characterization of that protein within the fraction with ligand-binding properties (Z-protein): (1) the use of hexachlorophene as ligand; (2) the inclusion of glycerol, 20%, during isolation to prevent aggregation and loss of binding-activity; and (3) the development of a charcoal binding assay. Upon ion exchange chromatography, the Z-fraction resolves into a group of distinct protein components and an unidentified material with a high 260/280 nm absorbancy ratio. The one protein component with binding capacity exhibits homogeneity on polyacrylamide gel electrophoresis (11% gel, Ann. N.Y. Acad. Sci. 121, 404-427, 1964; and 15% gel with SDS). With use of the charcoal method, apparent dissociation constants for the interaction between Z-protein and hexachlorophene, bilirubin and L-thyroxine, were found to be 20, 50, and 350 muM, respectively. The Scatchard plot generated upon extrapolation an n value of 1.0 with assumption of a molecular weight for Z-protein of 10(4) daltons.