Ethanol (50 mM) inhibited proteolysis in the perfused rat liver during stringent amino acid deprivation and also in the presence of normal and 10 times normal concentrations of plasma amino acids. The concentration-response curve of ethanol reached a plateau after 5 mM in both the presence and the absence of normal plasma amino acids, suggesting inhibition by oxidation products of ethanol. Intracellular glutamine, tyrosine and proline increased in concentration with ethanol, but the increases were too small to explain the observed inhibition of proteolysis. The uptake of 125I-asialofetuin was slightly decreased and the output of ammonia increased in the presence of ethanol. These, together with a significant suppression of basal proteolysis in the presence of amino acids, suggest that lysosomal function was directly affected. Electron-microscopic examination of lysosomal components showed that the aggregate volume of autophagosomes (initial vacuoles) were significantly smaller in livers perfused with ethanol than in controls. However, the equivalent volume of autolysosomes (degradative vacuoles) was the same in both groups. According to these results, ethanol inhibits protein degradation in the liver by two discrete mechanisms: one decreasing the formation of autophagic vacuoles and the other involving lysosomotropic inhibition, possibly via ammonia.