Insulin receptors in rat liver plasma membranes contain two alpha- and two beta-subunits held together by interchain disulphide bonds ([alpha beta]2 receptors). Affinity-labelled receptors were digested with chymotrypsin or elastase and then exposed to dithiothreitol before solubilization from membranes and SDS/polyacrylamide-gel electrophoresis. This resulted in partial reduction and isolation of Mr-225,000 alpha beta, Mr-200,000 alpha 1 beta, Mr-165,000 alpha beta 1 and Mr-145,000 alpha 1 beta 1 receptor halves containing intact (alpha, beta) or degraded (alpha 1, beta 1) subunits. The ability to identify half-receptor complexes containing intact or degraded subunits made it possible to assay each subunit simultaneously for insulin-induced proteolysis in isolated plasma membranes or during perfusion of rat liver in situ with insulin. In liver membranes, insulin binding increased the fraction of receptors containing degraded alpha-subunits to about one-third of the total population during 2 h of incubation at 23 degrees C. beta-Subunit proteolysis increased only minimally during this time. Plasma membranes isolated from livers perfused with insulin at 37 degrees C contained degraded alpha-subunits but only intact beta-subunits, showing that insulin induced cell-surface proteolysis of the binding, but not the kinase, domain of its receptor. Since previous observations [Lipson, Kolhatkar & Donner (1988) J. Biol. Chem 263, 10495-10501] have shown that receptors containing degraded alpha-subunits are internalized but do not recycle, it is possible that cell-surface degradation may play a role in the regulation of insulin-receptor number in hepatic tissue. Proteolysis of the beta-subunit is not a likely mechanism by which receptor-kinase activity may be attenuated under physiological conditions.