Degradation pathways of insoluble proteins have been analyzed in Escherichia coli by using a N-terminal beta-galactosidase fusion protein (VP1LAC) that aggregates immediately after its synthesis. In recombinant E. coli cells, lower molecular mass products, antigenically related to the entire fusion, accumulate together with the entire fusion. In absence of protein synthesis, the insoluble intact protein declines, suggesting that degradation of the recombinant protein also affects aggregated protein. Time course analysis of both soluble and insoluble cell fractions has revealed a limited proteolysis of the insoluble protein that removes the heterologous domain and permits the resulting beta-galactosidase fragments to refold and solubilize. Further extensive degradation occurs exclusively on soluble protein. The restricted proteolysis of misfolded, insoluble protein is the initiating event of a subsequent degradative pathway in which rate-limiting steps permit the accumulation of stable degradative intermediates.