The insulin-degrading enzyme (IDE) and the multicatalytic proteinase (MCP) can be isolated as components of a cytosolic proteolytic complex. IDE is the primary enzyme involved in cellular degradation of insulin, and insulin has been shown to interact with cytosolic IDE. MCP is believed to be important in non-ubiquitin pathways of cellular protein degradation. Insulin has a dose- and time-dependent inhibitory effect on MCP degradation of N-succinyl-Leu-Leu-Val-Tyr 7-amino-4-methylcoumarin (LLVY), a substrate for MCP. Proinsulin also inhibits LLVY degradation in a dose-dependent manner. The effect of insulin is immediate as measured in a continuously monitored assay of LLVY degradation. Purification of the IDE-MCP complex using a variety of approaches, including affinity and conventional chromatography, retains the insulin effect on LLVY degradation as long as the complex remains intact. After ion-exchange chromatography, which separates IDE and MCP, insulin no longer has an inhibitory effect. Recombination of purified IDE and MCP does not restore the effect of insulin, but inclusion of additional components from the ion-exchange column does. These results support the existence of a functional cytosolic complex that contains IDE and MCP. Insulin interacts with IDE and alters the activity of MCP, suggesting a functional relationship between these two components and a mechanism for an intracellular action of insulin.