The effects of insulin and glucagon on liver cell volume and proteolysis were studied in isolated perfused rat liver. The rate of proteolysis was assessed as [3H]leucine release from single-pass-perfused livers from rats which had been prelabelled in vivo by intraperitoneal injection of [3H]leucine. The intracellular water space was determined from the wash-out profiles of simultaneously added [3H]inulin and [14C]urea. In normo-osmotic (305 mosM) control perfusions the intracellular water space was 548 +/- 10 microliters/g wet mass (n = 44) and was increased by 16.5 +/- 2.6% (n = 6), i.e. by 85 +/- 14 microliters/g, after hypoosmotic exposure (225 mosM). Glucagon (0.1 microM) decreased the intracellular water space by 17 +/- 4% (n = 4), whereas insulin (35 nM) increased the intracellular water space by 9.3 +/- 1.4% (n = 15). Also, in isolated rat hepatocyte suspensions insulin (100 nM) caused cell swelling by 10.7 +/- 1.8% (n = 16), which was fully reversed by glucagon. In perfused liver, insulin-induced cell swelling was accompanied by a hepatic net K+ uptake (4.5 +/- 0.2 mumol/g) and an inhibition of proteolysis by 21 +/- 2% (n = 12); further addition of glucagon led to a net K+ release of 3.8 +/- 0.2 mumol/g (n = 7) and fully reversed the insulin effects on both cell volume and proteolysis. Similarly, insulin-induced cell swelling and inhibition of proteolysis were completely antagonized by hyperosmotic (385 mosM) cell shrinkage. Furthermore, cell swelling and inhibition of proteolysis after hypo-osmotic exposure or amino acid addition were reversed by glucagon-induced cell shrinkage. There was a close relationship between the extent of cell swelling and the inhibition of proteolysis, regardless of whether cell volume was modified by insulin, glucagon or aniso-osmotic exposure. The data show that glucagon and insulin are potent modulators of liver cell volume, at least in part by alterations of cellular K+ balance, and that their opposing effects on hepatic proteolysis can largely be explained by opposing effects on cell volume. It is hypothesized that hormone-induced alterations of cell volume may represent an important, not yet recognized, mechanism mediating hormonal effects on metabolism.