Receptor-mediated gene delivery has been reported for a number of different receptor systems although the intracellular fate of such systems has not been systematically investigated. In this study, we have determined the fate of a commonly used asialoglycoprotein (ASGP)-dependent DNA delivery system in isolated rat hepatocytes. ASPG-polylysine (PLL296) was ionically complexed with pSV-CAT DNA at a molar ratio of 10:1. The resulting complex inhibited 125I-ASGP binding to rat hepatocytes but ASGP only partially inhibited the binding of complex. The ASGP-independent binding was due to the interaction of the PLL component of the complex with plasma membranes and could be minimised by replacing PLL296 with PLL19. Following internalisation, ASGP was cleaved from the complex and translocated to the lysosomes where it was degraded. The DNA, however, remained in an intracellular compartment that cosedimented with plasma membranes in Percoll density gradients. This study shows first that hepatocytes do not process DNA internalised as ASGP complexes in a manner similar to ASGP itself, and second that the differential sorting of the two cleaved molecules leads to a rapid intracellular compartmentalisation of the DNA. Controlled release from this compartment may be a means for prolonged gene expression in gene therapy protocols.