Isolated liver cells contain insulin-degrading activity. Examination by chromatography on Sephadex G-75 of the products formed from 125I-insulin (1 nM or 1 µM) upon incubation with suspensions of hepatocytes for various time periods showed that there is at first a transient accumulation of the intermediate product, A chain, which is further hydrolyzed by protease(s) to low-molecular-weight components. These results indicate that the sequential degradative pathway is operative, both at low and high concentrations of insulin, in isolated liver cells, i.e., the insulin is first split at the disulfide bonds by glutathione-insulin transhydrogenase (GIT) into A and B chains, followed by proteolysis of the resultant polypeptides, and that this system might be used for well-defined studies of factors controlling insulin metabolism. The chelating agent ethylenediamine tetraacetic acid (EDTA) accelerated the accumulation of A chain (i.e., enhanced the activity of GIT), which is in keeping with its effect with purified GIT. In contrast to previous studies with tissue homogenates in which EDTA caused a marked inhibition of the proteolytic stage, EDTA had little or no effect with intact liver cells. Since EDTA does not appreciably penetrate the cell membrane, these data suggest that GIT activity either occurs on the cell surface or is readily available at the cell surface, whereas the proteolytic activity either occurs inside the cell or is inaccessible at the cell surface.