We describe a detailed morphological characterization of the endocytic pathway in differentiating chicken erythroblasts transformed by a temperature-sensitive mutant of avian erythroblastosis virus (AEV). These cells express high levels of transferrin receptors (TfR) when induced to differentiate at 42 degrees C. Biochemical analysis showed that most (approximately 90%) of the internalized 125I-Tf recycled within approximately 30 min while a smaller fraction of 125I-Tf required up to 2 h for recycling. By immunocytochemistry, the bulk of Tf and TfR was localized at the plasma membrane and in tubuloreticular early endosomes. This structure contained coated buds that labelled with an antibody specific for the clathrin light chain. Decreasing amounts of both Tf and TfR were detected in two distal compartments, spherical endosome vesicles resembling multivesicular bodies and the prelysosomal compartment (PLC) enriched in cation-independent mannose 6-phosphate receptor. As shown by fluorescent (FITC-Tf) labelling of living cells, the movement of Tf/TfR complex into these late structures was accompanied by a significant drop in pH from about 6, the value displayed by early endosomes, to values below pH 5.0. Since no detectable 125I-Tf degradation was observed during a 4 h period we believe that the Tf/TfR detected in these late endocytic structures avoids degradation and recycles back to the cell surface. The addition of an anti-TfR monoclonal antibody to the culture medium of these cells blocks their differentiation. Under this condition the antibody-TfR complex was trapped in an early endosome compartment that enlarged to more than twice its normal size. However, this condition did not affect the transport kinetics of horseradish peroxidase from the medium to the PLC.