Endocytosis of formaldehyde-treated serum albumin (FSA) mediated by the scavenger receptor was studied in rat liver endothelial cells. Suspended cells had about 8000 receptors/cell, whereas cultured cells had about 19,000 receptors/cell. Kd was 10(-8) M in both systems. Cell-surface scavenger receptors were found exclusively in coated pits by electron microscopy, by using ligand labelled with colloidal gold. Cell-surface-bound FSA could be released by decreasing the pH to 6.0; it was therefore possible to assess the rate of internalization of surface-bound ligand. This rate was very high: t1/2 for internalization of ligand prebound at 4 degrees C was 24 s. The endocytic rate constant at 37 degrees C, Ke, measured as described by Wiley & Cunningham [(1982) J. Biol. Chem. 257, 4222-4229], was 2.44 min-1, corresponding to t1/2 = 12 s. Uptake of FSA at 37 degrees C after destruction of one cell-surface pool of receptors by Pronase was decreased to 60%. This finding is compatible with a relatively large intracellular pool of receptors. The intracellular handling of 125I-tyramine-cellobiose-labelled FSA (125I-TC-FSA) was studied by subcellular fractionation in sucrose gradients, Nycodenz gradients or by differential centrifugation. The density distributions of degraded and undegraded 125I-TC-FSA after fractionation of isolated non-parenchymal cells and whole liver were similar, when studied in Nycodenz and sucrose gradients, suggesting that the subcellular distribution of the ligand was not influenced by the huge excess of non-endothelial material in a whole liver homogenate. Fractionation in sucrose gradients showed that the ligand was sequentially associated with organelles banding at 1.14, 1.17 and 1.21 g/ml. At 9-12 min after intravenous injection the ligand was in a degradative compartment, as indicated by the accumulation of acid-soluble radioactivity at 1.21 g/ml. A rapid transfer of ligand to the lysosomes was also indicated by the finding that a substantial proportion of the ligand could be degraded by incubating mitochondrial fractions prepared 12 min after intravenous injection of the ligand. The results indicate that FSA is very rapidly internalized and transferred through an endosomal compartment to the lysosomes. The endosomes are gradually converted into lysosomes between 9 and 12 min after injection of FSA. The rate-limiting step in the intracellular handling of 125I-TC-FSA is the degradation in the lysosomes.