The amount of <sup>125</sup>I-insulin associated with freshly isolated hepatocytes was increased 50% in the presence of 0.2 m M chloroquine (CQ) after 2 h of incubation. The degradation of insulin by the hepatocytes incubated with CQ was significantly diminished as compared with control cells. Hepatocytes incubated with <sup>125</sup>I-insulin in the presence of CQ showed a slower rate of ligand dissociation than control cells. More TCA-precipitable and less TCA-soluble material appeared in the dissociation buffer of CQ-treated cells. However, CQ inhibited only 25-35% of intracellular insulin degradation. Non-lysosomal intracellular insulin degradation appears to be responsible for the remaining portion of the ligand degradation by isolated hepatocytes.