The proteolytic degradation of 125I-labeled low density lipoprotein by monolayers of cultured human fibroblasts was prevented by exposure of the cells to chloroquine, an agent that has been reported previously to inhibit lysosomal degradative processes. Chloroquine did not inhibit the binding of low density lipoprotein to its cell surface receptor. However, the two regulatory actions that normally follow low density lipoprotein binding to its receptor, namely suppression of 3-hydroxy-3-methylglutaryl coenzyme A reductase activity and stimulation of cholesteryl ester formation, were both prevented when degradation of the lipoprotein was inhibited by chloroquine. Two other agents affecting lysosomal function, Triton WR 1339 and concanavalin A, also inhibited the proteolytic degradation of low density lipoprotein in intact fibroblasts and simultaneously prevented low density lipoprotein-mediated suppression of 3-hydroxy-3-methylglutaryl coenzyme A reductase activity and stimulation of cholesteryl ester formation. Unlike chloroquine, however, these two agents also affect the binding of low density lipoprotein to the cells. The inhibitory action of chloropuine, concanavalin A, and Triton WR 1339 could each be reversed by removal of the agent from the culture medium. These in vivo culture data, together with the observation that cell-free extracts of fibroblasts maximally degrade 125I-labeled low density lipoprotein at pH 4 and do not form acid-soluble material above pH 6, are consistent with the hypothesis that the proteolytic degradation of low density lipoprotein by monolayers of fibroblasts occurs within lysosomes. The data also suggest that normal lysosomal function is required in order for low density lipoprotein to regulate cholesterol synthesis and cholesteryl ester formation in the fibroblast system.