Abstract: Stimulation of glutamate binding by the dipeptide l-phenylalanyl-l-glutamate (Phe-Glu) was inhibited by the peptidase inhibitor bestatin, suggesting that the stimulation was caused by glutamate liberated from the dipeptide and not by the dipeptide itself. It further suggests that this form of glutamate binding should be reinterpreted as glutamate sequestration and that stimulation of binding both by dipeptides and after preincubation with high concentrations of glutamate is likely to be due to counterflow accumulation. Several other criteria indicate that most of glutamate binding stimulated by chloride represents glutamate sequestration: Binding is reduced when the osmolarity of the incubation medium is increased, when membranes incubated with [3H]glutamate are lysed before filtration, and when membranes are made permeable by transient exposure to saponin. Moreover, dissociation of bound glutamate after a 100-fold dilution of the incubation medium is accelerated about 50 times by the addition of glutamate to the dilution medium. This result would be anomalous if glutamate were bound to a receptor site; it suggests instead that glutamate is transported in and out of membrane vesicles by a transport system that preferentially mediates exchange between internal and external glutamate. Glutamate binding contains a component of glutamate sequestration even when measured in the absence of chloride. Sequestration is adequately abolished only after treating membranes with detergents; even extensive lysis, sonication, and freezing/thawing may be insufficient.