Palmitoyl-CoA dissociates the fatty acid synthetase complex from Mycobacterium smegmatis into inactive subunits of molecular weight 250,000 as determined by sucrose density gradient centrifugation. Palmitoyl-CoA binds to the subunits but the binding can be prevented and reversed by the mycobacterial 3-O-methylmannose-containing polysaccharide. When the palmitoyl-CoA containing inactive subunits were isolated by gel filtration on Sepharose 6B, and then concentrated and dialyzed against 0.5 M phosphate buffer, pH 7.0, containing 3 mM of the complexing agent heptakis-(2,6-di-O-methyl)-beta-cyclodextrin, activity was regenerated to the level of 40 percent of a control sample. The reversibility of the dissociation and inactivation of the synthetase by palmitoyl-CoA suggests that this end product might play a regulatory role by acting as a feedback inhibitor.