This report describes the use of an antibody directed against the carboxyl terminus of the insulin receptor beta subunit to assess the fate of the insulin receptor protein over the time course of insulin-induced receptor down-regulation. The insulin receptor beta subunit is lost from the cellular membranes of insulin-treated 3T3-C2 fibroblasts with a time course superimposable with the insulin-induced loss of cellular insulin binding activity. Concomitant with the time-dependent loss of the intact beta subunit from the membranes, a 61,000-Da fragment of the insulin receptor beta subunit accumulates in the cytosol of the cells in a time-dependent manner. The insulin-induced loss of the intact beta subunit from the cellular membranes is inhibited by cycloheximide. Chloroquine and the thiol protease inhibitors leupeptin and E-64 inhibit the insulin-induced loss of the intact beta subunit from the membranes and induce an accumulation of the intact subunit in the membranes. However, in the presence of leupeptin, E-64, or chloroquine, the insulin-induced loss of insulin binding activity occurs normally. These data indicate that down-regulation results in the loss of the intact beta subunit from the cellular membranes with the production of a fragment of the beta subunit in the cytosol. The protease responsible for the generation of the fragment is a thiol protease which requires acidic conditions. Since the insulin-induced proteolysis of the beta subunit can be totally inhibited under conditions where the insulin-induced loss of insulin binding activity proceeds normally, the proteolysis of the beta subunit is a process which is separate and distinguishable from the insulin-induced loss of insulin binding activity.