The transfer and metabolism of cortisol and cortisone and the effect of protein binding on these processes have been investigated in vitro in the perfused human placenta. The clearance of cortisol in buffer, expressed as a fraction of the antipyrine transfer rate (clearance index), was 0.50 +/- 0.05 SEM in either direction. Extensive conversion to cortisone (85%) occurred during transfer. Addition of corticosteroid-binding globulin (CBG) in amounts sufficient to bind 50% of the cortisol reduced the clearance (0.40 +/- .026) insignificantly, whereas human serum albumin (HSA) in amounts sufficient to bind 50% of the cortisol reduced the clearance to 0.28 +/- 0.012 (P less than 0.001) even though the association constant for albumin is approximately 1000-fold less. The percent of conversion to cortisone did not change significantly with protein binding. The clearance index of cortisone from a protein-free perfusate was 0.74. With CBG and albumin in the same concentrations as used in the cortisol experiments, the binding of cortisone to CBG was 23% and its clearance was 0.70; with albumin, the binding was 45% and the clearance index was 0.45. The addition of albumin and CBG to the same perfusate resulted in a cortisol clearance equal to that obtained with perfusate containing only albumin. Binding to albumin may be more significant than binding to CBG in controlling the transfer rate of cortisol to the fetus.