In vitro biodegradation of insulin in lung cytosol and subcellular pellets of normal and diabetic rats was investigated. Rat lung was homogenized and subcellular fractions were isolated by ultracentrifugation. Degradations of [125I]-insulin after incubation with lung cytosol or subcellular pellets was determined using the trichloroacetic acid method. The results show that insulin is highly degraded in cytosol and subcellular pellets. Cytosolic insulin degradation was strongly inhibited by bacitracin or sodium cholate. The degradation of insulin in the lung cytosol from diabetic rats was significantly less than from normal rat. The lung protease activity reached a maximum at pH 7.4. Enzyme inhibitors like bacitracin and sodium cholate noticeably enhanced the relative pharmacological bioavailability of insulin when given intratracheally with insulin to normal rats. Acidic insulin solutions (pH 3.0) had more pronounced hypoglycaemic effects than neutrol solution (pH 7.0). These in vitro and in vivo results suggest that the proteolytic enzymes in the lung limit pulmonary delivery of insulin. The coadministration of protease inhibitors would be a useful approach for improving the pulmonary absorption of insulin.