Protein disulphide-isomerase (PDI) activity was not detectable in freshly prepared rat liver microsomes (microsomal fraction), but became detectable after treatments that damage membrane integrity, e.g. sonication, detergent treatment or freezing and thawing. Maximum activity was detectable after sonication. Identical latency was observed in microsomes prepared by gel filtration and in those prepared by high-speed centrifugation. PDI activity was latent in all particulate subcellular fractions, but not latent in the high-speed supernatant. When all fractions were sonicated to expose total PDI activity, PDI was found at highest specific activity in the microsomal fraction and co-distributed with marker enzymes of the endoplasmic reticulum. Washing of microsomes under various conditions that removed peripheral proteins and, in some cases, bound ribosomes did not remove significant quantities of PDI, nor did it affect the latency of PDI activity. Treatment of microsomes with proteinases, under conditions where the permeability barrier of the microsomal vesicles was maintained intact, did not inactivate PDI significantly or affect its latency. PDI was very readily solubilized from microsomal vesicles by low concentrations of detergents, which removed only a fraction of the total microsomal protein. In all these respects, PDI resembled nucleoside diphosphatase, a marker peripheral protein of the luminal surface of the endoplasmic reticulum, and differed from NADPH: cytochrome c reductase, a marker integral protein exposed at the cytoplasmic surface of the membrane. The data are compatible with a model in which PDI is loosely associated with the luminal surface of the endoplasmic reticulum, a location consistent with the proposed physiological role of the enzyme as catalyst of formation of native disulphide bonds in nascent and newly synthesized secretory proteins.