The kinetics of albumin catabolism were studied in normal rats and rats with streptozotocin induced diabetes (blood glucose greater than 500 mg%). Whether determined from the clearance of 125I-albumin from plasma or from the whole body, after 10 days of severe, uncontrolled diabetes there was a 30-35% decrease in the catabolic rate for albumin in the diabetic rats compared to normals. There was also about a 35% contraction of the relative extravascular distribution volume for albumin in the diabetic rats, and about a 25% decrease in the total body mass of albumin. However, the concentration of albumin in the circulation was the same in normal and diabetic animals. We conclude that when the rate of albumin synthesis is substantially depressed in diabetes, the rat maintains normal plasma albumin concentration both by decreasing albumin's fractional catabolic rate and by shifting albumin from the extravascular to the vascular compartment.