Biochemical and morphological techniques were used to demonstrate the early steps in the endocytosis of transferrin in broken A431 cells. After binding 125I-transferrin, the cells were broken by scraping and then warmed. 125I-transferrin became inaccessible to exogenous anti-transferrin antibody providing a measure of the internalization process. Parallel morphological experiments using transferrin coupled to horseradish peroxidase confirmed internalization in broken cells. The process was characterized and compared with endocytosis in intact cells and showed many similar features. The system was used to show that both the appearance of new coated pits and the scission of coated pits to form coated vesicles were dependent on the addition of cytosol and ATP whereas invagination of pits was dependent on neither.