The metabolism of proline was studied in liver cells isolated from starved rats. The following observations were made. 1. Consumption of proline could be largely accounted for by production of glucose, urea, glutamate and glutamine. 2. At least 50% of the total consumption of oxygen was used for proline catabolism. 3. Ureogenesis and gluconeogenesis from proline could be stimulated by partial uncoupling of oxidative phosphorylation. 4. Addition of ethanol had little effect on either proline uptake or oxygen consumption, but strongly inhibited the production of both urea and glucose and caused further accumulation of glutamate and lactate. Accumulation of glutamine was not affected by ethanol. 5. The effects of ethanol could be overcome by partial uncoupling of oxidative phosphorylation. 6. The apparent K(m) values of argininosuccinate synthetase (EC 6.3.4.5) for aspartate and citrulline in the intact hepatocyte are higher than those reported for the isolated enzyme. 7. 3-Mercaptopicolinate, an inhibitor of phosphoenolpyruvate carboxykinase (EC 4.1.1.32), greatly enhanced cytosolic aspartate accumulation during proline metabolism, but inhibited urea synthesis. 8. It is concluded that when proline is provided as a source of nitrogen to liver cells, production of ammonia by oxidative deamination of glutamate is inhibited by the highly reduced state of the nicotinamide nucleotides within the mitochondria. 9. Conversion of proline into glucose and urea is a net-energy-yielding process, and the high state of reduction of the nicotinamide nucleotides is presumably maintained by a high phosphorylation potential. Thus when proline is present as sole substrate, the further oxidation of glutamate by glutamate dehydrogenase (EC 1.4.1.3) is limited by the rate of energy expenditure of the cell.