1. Cytoplasmic acetoacetyl-CoA thiolase was highly purified in good yield from rat liver extracts. 2. Mg(2+) inhibits the rate of acetoacetyl-CoA thiolysis but not the rate of synthesis of acetoacetyl-CoA. Measurement of the velocity of thiolysis at varying Mg(2+) but fixed acetoacetyl-CoA concentrations gave evidence that the keto form of acetoacetyl-CoA is the true substrate. 3. Linear reciprocal plots of velocity of acetoacetyl-CoA synthesis against acetyl-CoA concentration in the presence or absence of desulpho-CoA (a competitive inhibitor) indicate that the kinetic mechanism is of the Ping Pong (Cleland, 1963) type involving an acetyl-enzyme covalent intermediate. In the presence of CoA the reciprocal plots are non-linear, becoming second order in acetyl-CoA (the Hill plot shows a slope of 1.7), but here this does not imply co-operative phenomena. 4. In the direction of acetoacetyl-CoA thiolysis CoA is a substrate inhibitor, competing with acetoacetyl-CoA, with a K(i) of 67mum. Linear reciprocal plots of initial velocity against concentration of mixtures of acetoacetyl-CoA plus CoA confirmed the Ping Pong mechanism for acetoacetyl-CoA thiolysis. This method of investigation also enabled the determination of all the kinetic constants without complication by substrate inhibition. When saturated with substrate the rate of acetoacetyl-CoA synthesis is 0.055 times the rate of acetoacetyl-CoA thiolysis. 5. Acetoacetyl-CoA thiolase was extremely susceptible to inhibition by an excess of iodoacetamide, but this inhibition was completely abolished after preincubation of the enzyme with a molar excess of acetoacetyl-CoA. This result was in keeping with the existence of an acetyl-enzyme. Acetyl-CoA, in whose presence the overall reaction could proceed, gave poor protection, presumably because of the continuous turnover of acetyl-enzyme in this case. 6. The kinetic mechanism of cytoplasmic thiolase is discussed in terms of its proposed role in steroid biosynthesis.