[131I]Thyroglobulin [( 131I]Tg), prepared by either enzymatic iodination of human goiter Tg in vitro or isolation from the thyroids of rats previously injected with 131I, was digested with a solubilized enzyme mixture prepared from purified hog thyroid lysosomes. The digestion was performed at 37 C for 24 h under nitrogen at pH 5.0 in the presence of 4 mM dithiothreitol. Under these conditions the release of free [131I] iodoamino acids (MIT, DIT, T4, and T3) was quantitatively very similar to that observed with a standard pronase digestion procedure. To determine whether other amino acids in Tg were released as quantitatively as the iodoamino acids, free amino acids in the lysosomal digest were measured, and total free amino acid release was compared with a similar analysis performed after digestion of [131I]Tg with 6 N HCl. Total amino acid release was much less complete than iodoamino acid release, indicating preferential release of iodoamino acids from Tg by lysosomal digestion. Analysis of the lysosomal digest by HPLC on a size exclusion column indicated that Tg was degraded to peptides with a mol wt less than 4000. Assuming that the in vitro lysosomal digestion system represents a valid model for the physiological proteolytic system that degrades Tg, the results of the present study suggest that a substantial portion of the Tg in the thyroid is not degraded to free amino acids and that peptide fragments of Tg are normally present in the thyroid. In such a case, the fate and possible physiological activity of these fragments require further elucidation.