Hepcidin, a 25-amino acid peptide hormone, is the principal regulator of plasma iron concentrations. Hepcidin binding to its receptor, the iron exporter ferroportin, induces ferroportin internalization and degradation, thus blocking iron efflux from cells into plasma. The aim of this study was to characterize the fate of hepcidin after binding to ferroportin. We show that hepcidin is taken up by ferroportin-expressing cells in a temperature- and pH-dependent manner, and degraded together with its receptor. When Texas red-labeled hepcidin (TR-Hep) was added to ferroportin-GFP (Fpn-GFP) expressing cells, confocal microscopy showed co-localization of TR-Hep with Fpn-GFP. Using flow cytometry, we showed that the peptide was almost completely degraded by 24 h after its addition, but that lysosomal inhibitors completely prevented degradation of both ferroportin and hepcidin. In addition, using radio-labeled hepcidin and HPLC analysis we show that hepcidin is not recycled, and that only degradation products are released from the cells. Together these results show that the hormone hepcidin and its receptor ferroportin are internalized together and trafficked to lysosomes where both are degraded.