We used a modification of the TSH radioreceptor assay to detect TSH-binding inhibition (TBI) activity in serum and serum fractions from normal subjects and patients with Graves' disease. TBI activity is present in normal IgG prepared by DEAE-Sephadex chromatography and in normal globulins prepared by precipitation at 1.6 M ammonium sulfate. Other normal serum proteins also had TBI activity when large concentrations were tested. Gel filtration chromatography and powder block electrophoresis were used to prepare fractions of normal and Graves' disease sera. In these fractions from normal serum. TBI activity was found in both gamma-globulin and alpha-globulin-albumin fractions electrophoretically and in both 7S and 4S peaks from gel filtration. TBI activity from Graves' disease patients' sera was similarly distributed, but relatively more TBI accompanied the electrophoretic gamma-globulins. Sepharose Protein-A and anti-IgG were used as immunoabsorbents to isolate and purify IgG from normal and Graves' disease sera. TBI activity in IgG was proportional to the IgG concentration, indicating that the TBI which migrates as a gamma-globulin electrophoretically is an IgG and thus may possibly be an antibody. Inhibitory activity found in normal serum globulins and the non-IgG fractions of both normal and abnormal sera seriously interferes with attempts to use the TSH radioreceptor assay to study the hypothesized anti-TSH, receptor antibody in the serum of patients with Graves' disease.