Placental lactogen (PL) stimulates amino acid transport, DNA synthesis, and insulin-like growth factor production in isolated fetal fibroblasts and myoblasts. To clarify the mechanisms by which PL exerts its effects in fetal tissues, we have examined the binding and processing of PL and its receptor in cultured ovine fetal skin fibroblasts. Fetal sheep fibroblasts bound ovine PL (oPL) with high affinity (Kd, 0.2 nM) and ovine (o) GH (Kd, 1.6 nM) and oPRL (Kd, > 200 nM) with lower affinities, as recently reported. Maximal specific binding of oPL was noted after a 24-h incubation at 4 C. When fibroblasts were incubated with [125I]oPL at 4 C and then warmed to 37 C, the radiolabeled hormone was internalized within 2-4 min. Most of the internalized hormone, however, was recycled rapidly to the cell surface by 6-10 min and released intact by retroendocytosis into the incubation medium. Of the small amount of remaining internalized radioligand, approximately 50% appeared to be degraded, as assessed by solubility in trichloracetic acid. To directly examine the cellular processing of receptor proteins, we used the membrane-impermeant cross-linking reagent bis-(sulfosuccinimidyl)suberate (BS3) to detect oPL-binding sites confined to the cell surface. These studies detected a specific oPL-receptor complex with a mol wt of 130 kilodaltons, suggesting that the mol wt of the membrane receptor is 108 kilodaltons. At 37 C, oPL-receptor complexes were internalized rapidly, reducing cell surface binding activity to 25% of the initial values within 4 min. oPL receptor activity reappeared on the cell surface at 6 min, suggesting receptor recycling, but declined precipitously during the ensuing 30 min, reflecting receptor processing and turnover. After proteolysis of surface receptors with trypsin, binding activity was recovered fully during a 12- to 24-h incubation in serum-containing medium. Recovery of surface receptors was blocked by cyclohexamide (2 microM), suggesting that repopulation of receptors depends upon new protein synthesis. Specific binding of PL was 1.5- to 5-fold higher in cells preincubated in medium containing dexamethasone (0.1 microM), suggesting that glucocorticoids may regulate expression of the fetal PL receptor. These studies provide insight into the cellular mechanisms by which the fetus may regulate its sensitivity and response to PL.