In isolated hepatocytes of fat-fed rats, as compared to control fed animals, the cellular uptake of [1-14C] oleate and its oxidation to CO2 were similar but the incorporation of the label into water-soluble products (mainly ketone bodies) was increased by 36.6% whereas its esterification to triacylglycerols and phospholipids decreased by 36%. While endogenous ketogenesis was slightly but not significantly increased, ketone body synthesis from both 2 mM octanoate and 0.7 mM oleate was stimulated two fold. Thus, in the fatfed rats the oxidative pathway is clearly activated whereas long chain fatty acids are preferentially channelled into the oxidation pathway at the expense of esterification. Yet, hepatocyte triacylglycerol content was 3-fold higher after fat-feeding. In this regard, lysosomal triacylglycerol lipase (EC 3.1.1.3) activity, in homogenates of hepatocytes was decreased by 32% (p less than 0.01). This findings suggest a lower breakdown of endogenous triacylglycerols, which, taken together with decreased secretion of VLDL lipoprotein triacylglycerol (Kalopissis et al. Biochem. J. 198: 373, 1981) and an in vivo increased fatty acid influx to the liver may contribute to the accumulation of lipids in the livers of fat-fed rats.