1. The utilization of [1-14C]palmitate by hepatocytes prepared from fed and starved neonatal and adult rats has been examined by measuring isotopic incorporation into various products. 2. In cells from fed adult rats the principal products were esters (triglycerides and phospholipids) but ketone bodies were the main metabolic end products in cells from starved adult and fed and starved neonatal rats. Production of triglycerides exceeded that of phospholipids in fed adult cells whereas phospholipid formation always predominated in neonatal cells. 3. The high rate of fatty acid oxidation and hence NADH formation by neonatal cells is reflected by a lower acetoacetate--3-hydroxybutyrate ratio at the earlier stages of incubation of neonatal cells. 4. The addition of glycerol modified quantitatively the products of palmitate metabolism by adult hepatocytes but no such effects were observed with neonatal cells. 5. Compared with adult cells, neonatal hepatocytes showed very low rates of lipogenesis that were only enhanced a little by addition of lactate/pyruvate and did not show any effects of glucose concentration upon incorporation of tritium from 3H2O into lipids.