Vanadate is a phosphate analogue that inhibits enzymes involved in phosphate release and transfer reactions (Simons, T. J. B. (1979) Nature 281, 337-338). Since such reactions may play important roles in endocytosis, we studied the effects of vanadate on various steps in receptor-mediated endocytosis of asialoorosomucoid labeled with 125I-tyramine-cellobiose (125I-TC-AOM). The labeled degradation products formed from 125I-TC-AOM are trapped in the lysosomes and may therefore serve as lysosomal markers in subcellular fractionation studies. Vanadate reduced the amount of active surface asialoglycoprotein receptors approximately 70%, but had no effect on the rate of internalization and retroendocytosis of ligand. The amount of surface asialoglycoprotein receptors can be reduced by lowering the incubation temperature gradually from 37 to 15 degrees C (Weigel, P. H., and Oka, J. A. (1983) J. Biol. Chem. 258, 5089-5094); vanadate affected only the temperature--sensitive receptors. Vanadate inhibited degradation of 125I-TC-AOM 70-80%. Degradation was much more sensitive to vanadate than binding; half-maximal effects were seen at approximately 1 mM vanadate for binding and approximately 0.1 mM vanadate for degradation. By subcellular fractionation in sucrose and Nycodenz gradients, it was shown that vanadate completely prevented the transfer of 125I-TC-AOM from endosomes to lysosomes. Therefore, the inhibition of degradation by vanadate was indirect; in the presence of vanadate, ligand did not gain access to the lysosomes. The limited degradation in the presence of vanadate took place in a prelysosomal compartment. Vanadate did not affect cell viability and ATP content.