Acetylated derivatives of glucagon have been prepared by reacting this hormone under various conditions with acetic anhydride. They have been chemically characterized by the use of a 14C-labeled reagent, by peptide mapping techniques following hydrolysis by pronase and chymotrypsin, and by spectroscopy. Acetylation in sodium acetate (pH 5.5) results in a full substitution of the alpha-amino group of the N-terminal histidyl residue, but in a partial (about 0.3 acetyl group per residue) substitution of the epsilon-amino group of the lysyl residue 12. The monosubstituted (on the alpha-amino group) and the disubstituted (on both amino groups) acetylated components have been separated by chromatography on DEAE-cellulose and CM-cellulose. Acetylation in sodium bicarbonate (pH 8.0) results in a complete substitution of both amino groups and of the hydroxyl groups of the tyrosyl residues 10 and 13. Complete deacetylation of the O-acetyltyrosyl residues occurs upon treatment with hydroxyl-amine. Mono, di and tetraacetylglucagon are homogeneous when analyzed by disc gel electrophoresis; di and tetrasubstituted derivatives show an increased mobility towards the anode. 125I-labeled derivatives of acetylglucagon show higher distribution coefficients in the aqueous two-phase dextran/poly(ethylene glycol) system than do similar derivatives of glucagon. Acetylation decreases in parallel the ability of glucagon to stimulate the activity of adenylate cyclase and to bind to its receptors in liver cell membranes of the rat. The biological potencies of the mono, di and tetrasubstituted derivates are, respectively, about 10, 1 and 0.1% that of native glucagon. The binding properties of the material dissociated from the acetylglucagon-receptor complex suggest that the reduction in biological activity results from a decrease in the intrinsic affinity of the modified glucagon for the receptors, as well as from the presence of small amounts of residual, unreacted glucagon. Studies with 125I-labeled derivatives of glucagon indicate that acetylation decreases the rate of association and increases the rate of dissociation of the hormone-receptor complex.