Morphologic and physiologic studies have established that filtered proteins are absorbed in the proximal tubule by endocytosis and transported to the lysosomes for degradation. The tubular absorption, hydrolysis and accumulation of albumin were examined in all three segments of the rabbit proximal tubule. S1, S2 and S3 segments were dissected and perfused in vitro with tritiated albumin at a physiologic concentration of 0.0364 mg/ml, and with [14C]inulin to determine fluid reabsorption. In addition, the three segments were fixed for ultrastructural examination after perfusion under conditions similar to those in the physiologic studies. The fluid reabsorption was similar in S1 and S2 but lower in S3. Albumin absorption was unexpectedly similar in the three segments. A lower percentage of absorbed albumin was hydrolyzed in the S3 segment compared with the earlier segments. The values were 70 +/- 15%, 61 +/- 11%, and 30 +/- 4% for S1, S2, and S3, respectively. The cellular accumulation of protein was highest in the S3 segment. The ultrastructure of the three segments was similar to that described in in vivo preserved kidneys, and no abnormalities were observed in the endocytic-lysosomal compartment. These results reveal axial heterogeneity in the hydrolysis of absorbed albumin by the rabbit proximal tubule and suggest that under normal physiologic conditions the S3 segment has a lower lysosomal proteolytic activity. Although the S3 segment maintains a high capacity for protein absorption, the earlier proximal segments likely have a greater role in protein degradation.