We have investigated the interaction of the two classes of ligands (lysosomal enzymes and IGF-II) which bind to the IGF-II/Man-6-P receptor. Highly purified beta-galactosidase which we isolated from bovine testis inhibited (125)I-IGF-II binding to pure IGF-II/Man-6-P receptor with the concentration that was required for half-maximal inhibition being 25 nM. The inhibition by beta-galactosidase was reversed by mannose-6-phosphate and the dose response curve for the reversal by mannose-6-phosphate was typical for binding to the IGF-II/Man-6-P receptor. Acidic forms of beta-galactosidase were isolated by ion exchange chromatography on DEAE-Sephacel. These acidic forms of beta-galactosidase which had been previously shown to exhibit enhanced cellular uptake also showed increased potency in inhibiting the binding of (125)I-IGF-II to the receptor. Scatchard analysis of binding of IGF-II to the receptor in the presence of concentrations of beta-galactosidase which caused partial inhibition of (125)I-IGF-II binding, demonstrated that beta-galactosidase decreased the binding affinity for IGF-II. We have shown that IGF-II is a substrate for Cathepsin C. Cathepsin C cleaves Ala-Tyr dipeptide from the N-terminus. Comparison of the native IGF-II with the desdipeptidyl IGF-II for binding to the IGF-II/Man-6-P receptor, the IGF-I receptor, and IGF binding proteins showed equipotency of the two species of IGF-II. We have also attempted to confirm a report that in the 1854 rat cell line which produces IGF-II and has IGF-II receptors, IGF-II is an autocrine growth factor for of these cells in serum free media, acting through the IGF-II/Man-6-P receptor. We found that neither IGF-I or IGF-II could support the multiplication of the 1854 cell line under serum-free conditions and, using an antibody which blocks the binding of IGF-II to the IGF-II/Man-6-P receptor, we were unable to demonstrate a role for this receptor in signaling the growth response.