Recent evidence has shown that the outer, overt, malonyl-CoA-inhibitable carnitine palmitoyltransferase (CPTo) activity resides in the mitochondrial outer membrane [Murthy & Pande (1987) Proc. Natl. Acad. Sci. U.S.A. 84, 378-382]. A comparison of CPTo activity of rat liver mitochondria with the inner, initially latent, carnitine palmitoyltransferase (CPTi) of the mitochondrial inner membrane has revealed that the presence of digitonin and several other detergents inactivates CPTo activity. The CPTi activity, in contrast, was markedly stimulated by various detergents and phospholipid liposomes. These findings explain why in previous studies, which used digitonin or other detergents to expose, separate and purify the CPT activities, the inferences were drawn that (a) the ratio of latent to overt CPT was quite high, (b) both the CPT activities could be ascribed to one active protein recovered, and (c) the observed lack of malonyl-CoA inhibition indicated possible loss/separation of a putative malonyl-CoA-inhibition-conferring protein. Although both CPTo and CPTi were found to catalyse the forward and the backward reactions, CPTo showed greater capacity for the forward reaction and CPTi for the backward reaction. The easily solubilizable CPT, released on sonication of mitoplasts or of intact mitochondria under hypo-osmotic conditions, resembled CPTi in its properties. When octyl glucoside was used under appropriate conditions, 40-50% of the CPTo of outer membranes became solubilized, but it showed limited stability and decreased malonyl-CoA sensitivity. Malonyl-CoA-inhibitability of CPTo was decreased also on exposure of outer membranes to phospholipase C. When outer membranes that had been exposed to octyl glucoside or to phospholipase C were subjected to a reconstitution procedure using asolectin liposomes, the malonyl-CoA-inhibitability of CPTo was restored. A role of phospholipids in the malonyl-CoA sensitivity of CPTo is thus indicated.