Although plasma glucagon levels in the rat fetus are in the adult range, hepatic glycogen is present in far greater abundance in the fetus than in the adult. To explain this paradox, adenylate cyclase response to glucagon was studied in partially purified membranes of rat livers obtained throughout perinatal life and at 3 months of age. The adenylate cyclase response to glucagon (10(-9) M) was only 7% of the adult response at day 15 of fetal life and 20% on the 21st day. No until after the 30th day postpartum did not reach maturity. Yet, the adenylate cyclase response to stimulation by NaF was comparable to the adult response throughout fetal life. The binding of [125I]iodoglucagon (2 X 10(-9) M) by these membrane preparations was only 1% of the adult level at day 15 of fetal life and increased to 23% at the 21st day, and, like the adenylate cyclase response to glucagon, did not reach maturity until after the 30th day of postnatal life. In contrast, insulin binding on the 15th day of gestation was 11% of the adult level and on the 21st day 45% of the adult level, reaching adult levels by the 30th postnatal day. An increase in membrane-associated particles, reflecting intramembranous protein, was observed during prenatal life, but the mean particle number per mum2 reached adult levels on the 21st day of fetal life, indicating that subsequent changes in hormone binding were clearly independent of non-specific changes in the number of particles. The findings suggest that the fetal liver is less sensitive to glucagon action than the adult liver, and that this glucagon "resistance" is mediated by a reduced capacity of the hepatocyte to bind glucagon at a time when substantial binding of insulin is demonstrable. Selective discrimination against glucagon may be important in promoting the anabolic processes required for normal fetal development.