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, 125I-insulin was rapidly (t 1/2 less than 5 min) internalized by hepatocytes at all three ages, reaching maximal levels (63-76% of the total cell-associated radioactivity) by 15 min. 125I-labelled degradation products appeared rapidly (t 1/2 less than 15 min) within the cells. Yet, the majority (68-77%) of the intracellular radioactivity consisted of intact 125I-insulin, even after 4 h at 37 degrees C. Hepatocytes pre-loaded with 125I-insulin and then acid-stripped of surface-bound radioactivity, rapidly released both intact 125I-insulin (retroendocytosis) and its radiolabelled degradation products. While intact insulin was initially released more rapidly (t 1/2 less than 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 125I-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.(ABSTRACT TRUNCATED AT 250 WORDS)