Isolated frt cells and purified subcellular fractions of fat cells have been shown to degrade insulin to biologically inactive trichloroacetic-acid-soluble fragments. Further study of this activity has revealed the following characteristics: 1. Most of the insulin-degrading enzymes are intracellular, inaccessible to insulin or trypsin when fat cells are intact. More that 90 per cent of the recovered activity is found in the high-speed supernatant (cytosol) when cell fractionation studies are performed. 2. The plasma membrane contains significant insulin-degradative capacity, as shown by tryptic digestion of intact cells and cell fractionation. 3. The pH optimum of the cell-membrane insulin-degrading site is more acid than that of the cytosol activity, but the tow enzyme systems are similar with regard to substrate specificity, response to metabolic inhibitors, and elution volume of degradation products on gel filtration. 4. The plasma-membrane-degrading activity differs from the specific insulin-binding site with regard to saturation kinetics, optimum temperature, substrate specificity, sensitivity to sulfhydryl-blocking agents, and trypsin snesitivity.