The destruction of (125)I-labelled insulin by an enzyme system from rat adipose tissue was studied. The system was located in the particulate fraction. Activity was assayed by the amount of (125)I-labelled degradation products rendered soluble in trichloroacetic acid. The system was heat-labile, with an alkaline pH optimum. The velocity of the reaction varied directly with the enzyme concentration. Paper chromatography of the degradation products showed six ninhydrin-sensitive areas with radioactivity coinciding with three of them. Albumin inhibited the system; ribonuclease did not. Although only 25% of the total (125)I-label was detected by this assay, results with insulin-specific assays suggested that most (80-90%) of the hormone was inactivated. Possible interpretations of these results are discussed. The particulate fractions of other tissues were also studied.