1. The component fatty acids of the endogenous phospholipids of microsomal preparations of Mucor, when shaken at 30 degrees C, increased in both chain length and in degree of unsaturation. The net effect was the production of gamma-linolenic acid which, over 2 h, increased from 17% to 32% of total fatty acids present. No further significant changes occurred after this time. 2. The major site for desaturation/elongation reactions was at the sn-2 position of PtdIns. PtdCho and PtdEtn were not implicated. 3. Of numerous metabolites and cofactors added to the microsomes, only malate could prolong the elongation/desaturation reactions for up to 6 h. This effect was shown to be due to a membrane-associated malic enzyme [malate dehydrogenase (decarboxylating) NADP+] with the NADPH produced being used in fatty-acid desaturation. 4. Kinetic analysis of cytosolic and microsomal enzymes [both in 0.1% (mass/vol.) Chaps] could not distinguish between them. However, when the microsomal malic enzyme was dialysed to remove Chaps, it lost 90% of activity, although the cytosolic malic enzyme lost only 20% activity. 5. The structural analogue of malate, tartronic acid, which is an inhibitor of malic enzyme, also inhibited the malate-induced stimulation of fatty-acyl group desaturation and elongation in the microsomal membranes. 6. It is concluded that two distinct malic enzymes exist, one soluble and one membrane bound, with similar active sites. Both have different roles in the production of NADPH, for lipid metabolism. The former will produce NADPH for fatty-acid biosynthesis whilst the latter produces NADPH for fatty-acid desaturation.