To study the intracellular sorting of internalized ligands and receptors, we examined the pathways of two ligands: transferrin, which is recycled, and alpha 2-macroglobulin (alpha 2M), which is degraded. In CHO cells the two ligands rapidly segregate into different intracellular compartments. Within 5 min fluorescein-labeled transferrin (F-Tf) is found in a large round juxtanuclear structure. Rhodamine-labeled alpha 2M is found in a punctate pattern. Ultra-structural localization studies demonstrate that colloidal gold-alpha 2M is found predominantly in endocytic vesicles, while ferritin-transferrin is found in small vesicles and tubular structures in a region adjacent to the Golgi complex. Using image intensified fluorescence microscopy and digital image analysis, we determined that the F-Tf containing structure has a pH of 6.4 +/- 0.2, while endocytic vesicles containing F-alpha 2M have a pH of 5.4 +/- 0.1. Our study defines a mildly acidic compartment, distinct from endocytic vesicles, that is involved in the recycling of internalized components back to the cell surface.