The binding and degradation of 125I-hIGF-I by isolated sheep hepatocytes have been examined. Hepatocytes were isolated by collagenase perfusion of 32-55 kg wether lambs and were incubated at 20 or 37 C at pH 7.4 in a 95% O2/5% CO2 atmosphere. Maximal binding was obtained at 60 min and declined slightly over the following 60-min period at both 20 and 37 C. Degradation of 125I-hIGF-I by the hepatocytes was minimal with 10-12% degradation over a 120-min period at 37 C. The lysosomal inhibitors chloroquine (0.2 mM), leupeptin and ammonium chloride had no significant effects on 125I-hIGF-I degradation or binding. At 20 C (60-min incubation), half maximal inhibition of 125I-hIGF-I binding was obtained with 8.4 +/- 1.1 nM hIGF-II, 16 +/- 2.4 nM hIGF-I, 36 +/- 6.2 nM oIGF-II, and 60 +/- 5.9 nM oIGF-I. Ovine insulin (0.01-10 uM) had no effect on 125I-hIGF-I binding. These observations suggest that IGF-I binds to the type II IGF receptor. The low molecular weight sheep serum IGF binding protein inhibited binding of 125I-hIGF-I to hepatocytes in a dose-dependent manner with half maximal inhibition occurring at 16.5 micrograms/ml, but did not affect IGF-I degradation. The current studies show that IGF-I interacts with ruminant hepatocytes via type II IGF receptors. The liver is not a major site of IGF-I degradation and the observed degradation is nonlysosomal and independent of receptor interaction.