We studied insulin processing and hepatic glycogenesis in cultured hepatocytes isolated from rat fetuses of 17, 19, and 21 days of gestation. Steady-state insulin binding increased by 250% between days 17 and 19, from 145 +/- 8 to 361 +/- 52 fmol/mg protein, and by an additional 40% (405 +/- 69 fmol/mg protein) by 21 days of gestation. At 37-degrees-C, I-125-insulin was rapidly (t1/2 < 5 min) internalized by hepatocytes at all three ages, reaching maximal levels (63-76% of the total cell-associated radioactivity) by 15 min. I-125-labelled degradation products appeared rapidly (t1/2 < 15 min) within the cells. Yet, the majority (68-77%) of the intracellular radioactivity consisted of intact I-125-insulin, even after 4 h at 37-degrees-C. Hepatocytes pre-loaded with I-125-insulin and then acid-stripped of surface-bound radioactivity, rapidly released both intact I-125-insulin (retroendocytosis) and its radiolabelled degradation products. While intact insulin was initially released more rapidly (t1/2 < 6 min), and reached a plateau after 15-30 min, the degradation products continued to accumulate in the medium for at least 4 h. Methylamine inhibited intracellular I-125-insulin degradation at all three gestational ages and also blocked insulin-stimulated glycogenesis in 19- and 21-day hepatocytes, without altering basal glycogen synthesis. Insulin-stimulated glycogenesis was not induced in 17-day fetal rat hepatocytes in control or methylamine-treated cultures. We conclude that both degradative and retroendocytotic pathways for processing insulin are present in fetal rat hepatocytes by 17 days of gestation. Further, insulin-receptor processing was functionally related to the glycogenic action of insulin in responsive 19- and 21-day fetal rat hepatocytes