Three siblings presented in their second year of life with megaloblastic anemia that responded to parenteral cobalamin (Cbl). Schilling tests were less than 1%, correcting to 5 to 15% after addition of hog intrinsic factor (IF). Gastric acid analysis and gastric biopsies were normal by light and electron microscopy. Gastric juice contained less than 3 pmol/ml of Cbl-binding ability due to IF (normal, 10-34 pmol/ml) and less than 2 pmol/ml of IF when measured with a radioimmunoassay (RIA) using normal human IF-[57Co]Cbl and rabbit anti-human IF serum (normal, 17-66 pmol/ml). However, RIA employing rabbit anti-hog IF serum gave values of 4-13 pmol/ml of IF (normal, 11-33 pmol/ml). This material had an apparent molecular weight of 40,000 (normal IF = 70,000). The IF from gastric biopsies appeared normal in terms of Cbl-binding ability, ileal binding, molecular weight, and both RIAs. This IF differed from normal mucosal IF, in that it lost its Cbl-binding ability when incubated at 37 degrees C at acid pH or in the presence of pepsin or trypsin. This loss was retarded when [57Co]Cbl was bound to the IF before these incubations. The stabilizing effects of neutralization and Cbl were also demonstrated in vivo. Schilling tests for the siblings of 0.4, 0.5, and 1.0% increased to 2.7, 5.7, and 4.3% (P less than 0.05), respectively, when the Schilling tests were repeated with the addition of NaHCO3 and cobinamide (which allows Cbl to bind immediately to IF). We conclude that Cbl malabsorption in these children is due to an abnormal IF that is markedly susceptible to acid and proteolytic enzymes which cause a decrease in its molecular weight and Cbl-binding ability and a loss of antigenic determinants that are recognized by the anti-human IF serum.